STOCKS recouped a good part of the previous massive losses last week on strong covering purchases made by financial institutions and mutual funds after the launching of Rs20 billion equity market fund amid hope of sustained run-up next week.

Although weekend profit-selling on blue chip counters, mainly the oil sector, did clip some initial gains, investors remained in an upbeat mood and pledged to carry over the recovery to next week.

The institutional support though manifested itself in a bigger way, analysts were skeptical about the future outlook owing to the prevailing political uncertainty and the absence of foreign investments.

But support emerged strong at lower levels on selected counters indicating entry of the National Investment Trust (NIT) as the manager of the newly established equity market fund, which, is believed, would give the needed support and depth to the hitherto ailing share market in the coming weeks in the backdrop of higher interim dividend and corporate earnings.

The KSE 100-share index consolidated well above the barrier of 11,000 points and was last quoted at 11,032.17, up 797.39 points, as leading base shares further rose under the lead of MCB, National Bank, Arif Habib Securities, Lucky and D.G. Khan Cement. The market recovered Rs244 billion at Rs3,440 billion.

Though the index has to go a long way to attain its previous high of 15,000 plus points, the goal may not be elusive after the entry of the NIT as a market stabiliser during the coming weeks.

An increase of Rs280 billion in the market capital and increase of well over 1,200 points in the KSE 30-share index reflect that the market would behave properly in coming weeks, market sources said.

The sentiment in part was also influenced positively by press reports that the National Investment Trust (NIT), manager of the recently set up Rs20 billion equity market fund, had made its debut in the share market at the fag-end of the last week.

“The NIT is already in the market and has lifted choice stocks in good numbers at the fag-end of the week encouraging the wavering bulls to take in bear onslaught with confidence”, analyst Hasnain Asghar Ali said.

The NIT has in its fold a massive, about Rs30 billion, profitable portfolios. It is also known as a judicious investment leader of the market even before its appointment as manager of the new fund. It is hoped that it would give the needed push and depth to the future stock market in the coming weeks, says Ahsan Mehanti, one of the leading analysts.

However, one should not expect an instant boom in the market as financial managers of the NIT might not ride the bandwagon just to show their investment skills but would certainly make calculated moves in a market still fraught with high financial risks, he said.

Analyst Ashraf Zakaria was of the opinion that even a modest presence of the NIT in the market could lure investors back to the market on the perception that future sailing would be smooth sans manipulation or speculative tilts.

Moreover, reports from corporate front are fairly encouraging. The second interim dividend by Rafhan Maize Product at the rate of 250 per cent (the first already paid at 350 per cent) and 100 per cent interim cash dividend by the Al-Ghazi Tractors indicate that the incoming ones could well prove the market stabiliser.

A massive 17 to 18 per cent across the board increase in petroleum prices earlier in the week prompted a lot of selling on the perception that the chain impact of the hike would significantly increase the cost of production and allied problems, notably on the export front.

The visit of the central bank governor and the finance minister during the week also boosted the investors’ confidence in the market amid hopes that the entry of NIT could ensure the interest of small investors also, floor brokers said.

Bulk of the support originated from financial institutions as brokers and general investors were still in two minds about the future direction of the market and played safe.

All leading banks and oil shares including National Bank, United Bank Alfalah, PSO, Shell Pakistan, Pakistan Oilfields and Attock Petroleum staged broad rallies under the lead of MCB and triggered sympathetic buying on other counters, mainly Dawood Hercules, ICI Pakistan, Clariant Pakistan, which recovered most of the previous losses, but finished partly clipped on weekend selling.

—Muhammad Aslam