June 30, 2008	Monday	Jamadi-us-Sani 25, 1429

THE stock market closed the eventful trading week on a steady note but investors were not sure about its behaviour next week after the buying euphoria associated with the market stabilisation measures fades.

However, the performance of KSE 100-share index which surpassed all its previous single-session record recovering 960.50 points or 8.60 per cent on June 24, showed that future sailing may be fairly smooth. A major boost, it received by the market stabilisation steps taken jointly by the KSE and the Security Exchange Commission of Pakistan (SECP) will continue to inspire fresh buying in the coming weeks, dealers said.

Its junior partner KSE 30-share index closely followed it and was quoted higher by 1,219 points on the same day at 13,970 but both ended below their career-best level owing to early week self-off.

Another notable feature of the week was the volume of 30 million shares which was its seven-year low, the all-time lowest figure being 15.141m shares recorded on Sept 3,2001 after the implementation of the T+3 trading system on the KSE.

Analysts attributed the fall to the rolling over week after the expiry of the matured June settlements as brokers remained busy in clearing business.

An increase of 960 points in the KSE 100-share index, only short of 140 points from its base of 1,000 points that came in the most pressing economic and political conditions indicates that this single-session record could not be bettered for years to come.

Even previous market crashes failed to give even a wink of the current episode. It finally ended with trimmed gain of 697.91 points at 12,953.19 recouping Rs203bn in the market capital.

Though it finally finished well above the recent lows but well below the week’s highs, reflecting the exit of foreign investors followed by some rethinking on the meteoric rise, not essentially backed by the objective economic and political conditions.

Some analysts said it was a trap to net in the vast clientele, having suffered massive losses in the market’s retreat from the post-budget highs and a fall of about 5,000 points but does not warrant such a big leap forward on technical grounds.

Some others said it was a grand technical rebound warranted by a heavily oversold market and triggered by upward revision of the upper circuit breaker to 10 per cent from the previous five per cent and downward revision of the lower locks to one per cent from the previous five per cent.

Many, however, still doubt market’s ability to sustain an apparent inspired run-up, said a leading stock broker adding “there is no change in the political scenario, the chief villain behind the market’s recent crash and erosion ofbn of rupees from the market capital as the light volume tells the tragic side of the episode”. But some others said the market has shown its tremendous potential to rise from the lows in response to positive news and corrective steps irrespective of the political tensions and uncertainty. The recovery of Rs285 in a day in the market capital at Rs3,731bn points to the inherent strength of the market.

Never before in the history of the KSE, the index has shown such an unprecedented recovery in a single session, they said adding the current record may not be easily bettered in the years to come.

The previous single-session high record was set at 643.04 points at 13,996.42 on Jan 3, 2008 after the postponement of national election after Benazir Bhutto’s murder.

The KSE 30-share index also set a new all-time high record in a day, up 1,219.28 points or 9.56 per cent, reflecting the strength of leading base shares.

But some analysts ask the wisdom behind the belated intervention after much water had flown under the bridge and the small investors had virtually lost all their savings invested in the share business.

The current rally did not benefit them as most of them kept to the sidelines licking their wounds suffered during the pre-recovery sustained fall.

The rally was not broad-based and was confined to a dozen leading base shares, mainly MCB, Pakistan Oilfields, OGDC, Engro Chemical, which recovered in part previous losses and contributed more than a half to the total rise in the index owing to their heavy weightage in it, said a leading broker.

Under the market stabilisation measures, among others, lower and upper circuit-breakers now will be applicable at price variation of one and 10 per cent respectively from the previous close and a total ban on short-selling, they said. A stabilisation fund of Rs30bn will also be set up in due to course to meet emergencies as the current one.

During the post-budget sessions the market had gradually fallen by 5,000 points on foreign and local selling and needed technical correction but in the absence of buying support from any quarter, fall was not averted.

Forward counters: The mid-week also allowed most of the leading shares on the cleared list to finish fully recovered under the lead of MCB, National Bank, Engro Chemical, JS & Co, Habib Bank, PTCL and United Bank

—Muhammad Aslam