THE share market last week shed nine per cent in value just in three sessions as conflicting reports about unity among the ruling coalition and consensus on some crucial issues kept investors in double mind all the time and they could not decide how to react to the changing background news.

Weaker links of the leading investors, having a little holding capacity, resorted to selling to avoid fresh losses as even strong institutional support failed to save the market from a deeper recession despite concerted efforts of the equity market fund to maintain a status quo.

The post-Musharraf buying euphoria, therefore, faded in the thick clouds of differences between the two coalition partners on the restoration of judges and other crucial issues triggering fresh selling by the shaky investors as they tried to shed an extra load.

The market’s future direction will be largely guided by peace among the contenders of power and an amicable settlement of all the pending issues as their one-point agenda of the president’s expulsion has been achieved.

The KSE 100-share index again closed in the minus column, off 264.9 points at 9,993.81 falling below its base level of 10,000 points on the weakness of blue chips. The market capital was down by Rs79 billion at Rs3,116.17 billion.

The 30-share index also plunged by 335.14 at 11,355.09 points.

Opinions are divided about the unity among the ruling coalition. Some fear they may fall apart but others are optimistic they will remain united as too much is at stake in the developing situation both on political and law and order fronts, as well as situation in the in the tribal belt which is escalating.

The view is that higher corporate announcements plus bonus shares would boost the underlying sentiment adding to previous gains in the index, but fears of infighting among the coalition partners may further lead to political uncertainty evoking nervous selling by leading investors despite active support of the equity market support fund.

The immediate market worries are restoration of the judges, consensus for the post of president, and immediate and urgent steps for revival of economy, analysts said.

“A fear about the downgrading of Pakistan’s Sovereign Currency rating by the Moody’s, weakness of the rupee and the absence of foreign buying could take further toll if sanity did not return to political manoeuvring under the national interest”, most analysts believe.

Many may not agree, but the market currently is being driven by both positive and negative news at the same time as higher dividend and bonus rates failed to generate the desired results, they said.

The market virtually raced towards its pre-reaction levels, up 4.5 per cent on heavy buying triggered by the resignation of president Musharraf. “Bulls were on the rampage after the news of the president’s exit”, analyst Hasnain Asghar Ali said, adding but it was euphoria.

“The market also witnessed all round optimism as was reflected by a recovery of 1.6 per cent in the value of the rupee at Rs76.50 in official trading and Rs75.70 in the kerb”, another leading analyst Ahsan Mehanti said.

Although the market’s initial reaction to the president’s resignation was bullish but its future direction would be guided by the action the coalition partners take improve the economy and solve the financial turmoil, observed analyst Tabish Hasan.

He said much of the future market outlook would depend on the initiative the contenders of power take to boost the economy, lure local and foreign investors back to have fresh stake in the share on the notion that sanity would prevail on political front.

The bulk of support earlier remained confined to the low-priced banking and oil shares, most of which finished with upper locks under the lead of MCB, National Bank, OGDC, Arif Habib Securities, Pakistan Oilfields and Pakistan Petroleum.

Forward counter: Leading shares on the cleared list also followed their counterparts in the ready section and fell sharply lower on stray selling under the lead of OGDC, MCB, National Bank, Pakistan Petroleum, Pakistan Oilfields, PSO, Shell Pakistan and a host of other blue chips.

—Muhammad Aslam.