THE KSE 100-share index last week managed to finish on higher side despite a spate of rumours including default on foreign debt repayments, freeze on foreign currency accounts and a record low hit by the rupee against the US dollar.

A series of corrective measures taken by the central bank including injection of massive amounts in dollar to the open market, lowering of bank cash requirements, and denial of the rumours, to a certain extent, defused the prevailing panic but the outflow of funds continued from the share market to other markets including bullion and the US dollar.

“Being under floor, the KSE 100-share index confidently absorbed the negative fallout of all rumours and managed to finish fractionally higher at 9,181.35, up 1.67 points,” analysts said. But its junior partner KSE 30-share index fell by 21.59 points at 10,042.85.

The removal of floor, in the wake of developing situation on the financial market, should have caused another massive crash owing to panic selling but the small investors were saved from fresh losses, they said.

The interesting feature of the week was that off-the-floor transactions were reported in some of the leading shares as a bail-out process initiated by some leading investors.

According to them on Oct 8, about 9.2 million shares changed hands in off-the-market transactions, which included about four million shares of Bank Alfalah at the rate of Rs31.25 per share.

“All eyes are now focused on the removal of the floor possibly by the next week. If the economic and law and order situations show improvement, the market will certainly react determining the future direction of the market,” floor brokers said.

Trading on the stock market resumed on a dull note as investors were worried over the global financial crisis and its possible fallout on the local economy and the reports of downgrading of Pakistan’s credit rating by Standard & Poor’s.

The volume figure did show a modest rise from the all-time low of 0.985 million shares at 2.561 million as some of the blue chips came in for fresh unloading under the lead of auto shares, notably Millat Tractors and Al-Ghazi Tractors.

“Strange are the operational moods of the investors,” said a leading analyst Ashraf Zakaria. “On April 16,2004,they pushed the single session volume to an all-time high of 1.122 billion shares followed by massive buying in OGDC, Fauji Cement and PTCL at 198m, 124m and 118m shares but on Sept 30,2008, they traded only 0.985m shares, a new all-time low in the trading history of the KSE,” he

added.

The investors’ chief worry was, however, the removal of freeze on the KSE index, which is said to be the main daily volume eater and keeping investors out of the daily normal trading activity.

The KSE high-ups are in talks with the SECP and the ministry of finance on the issue and their Sunday’s meeting with the finance minister has raised hopes that the ban on floor may be lifted after the money is raised for the proposed fund.

“The future outlook still appears to be a bit pessimistic,” analyst Tabish H. Rajabali said. “But the news about the fund could generate buying in an unfrozen market,” he added.

He said investors’ eyes were set on the proposed Dubai meeting of the Friends of Pakistan group, which was expected to finalise a rescue aid package of $15 billion for the ailing economy of the country.

Analyst Ahsan Mehanti feels that the continued weakness of the dollar on the world markets owing to financial crisis and the law and order situation, is keeping foreign investors out of the local blue chip shares for obvious reasons.

“Higher badla rates, US missile attacks on tribal areas and falling foreign reserves are said to be other inhibiting factors”, he added.

Dividend announcements by leading oil companies, notably, Pakistan Oilfields, Attock Petroleum, Attock Refinery, some of the leading textile shares and modarabas, Sitara Chemical, Sazgar Engineering were on the higher side but were neglected owing to the prevailing sluggishness.

Forward counters: Trading on this counter remained suspended for technical reasons including ban on blank and short selling. As a result, no business was recorded in any of the shares listed on the futures counter .— Muhammad Aslam