STOCK values last week recovered a good part of initial losses on revival of demand in a highly oversold market but the future direction was unclear owing to the prevailing tension between contenders of power in the city.

The benchmark index managed to reduce a good part of early losses and ended recovered from the low of 12,192 points. It was last quoted at the week’s peak level at 12,346.52, showing a fresh fall of 43.60 points on the strength of fertiliser sector sans Engro Corporation.

Fauji Fertiliser was credited as star performer and so did its other sister companies. Among oil companies, Pakistan Oilfield was the top gainer.

Opinions were, however, divided about the future trend as investors had doubt whether or not the market had survived the shock of a massive city upheaval.

The investor’s main worry appeared to be the fragile law and order situation and reports of warring postures of political activists.

Most analysts believed direction of the market would be clear by next week, after the return of foreign investors amidst relative calm on the political front.

The current tension between Pakistan and the United States on terror operations and suspension of $800 million US military aid to Pakistan seemed to have added new dimensions to the prevailing tension in political ties between the two major partners on war on terror.

The midweek snap rally sans matching turnover figure was not well-cherished by investors.

Most analysts believed that until the index numbers were matched by comparative volume figures any rally could be an illusion.

Reports of higher earnings and market talk of handsome payouts by fertiliser and oil sectors for the end-June quarter lured investors back to cover positions in them.

Trade volume was maintained around daily average level of about 32m shares, bulk of which was confined to undervalued shares as investors were not inclined to take even a calculated financial risk until law and order situation in the city improved.

The market already groaning under last week’s tragic event reopened on bearish note and appeared to be in search of some rescuers but there were not many as everyone sought refuge where possible.

“Negative news seems to have overtaken the early market in quick succession,” says analyst Ahsan Mehanti commenting on the prevailing scenario, notably the city killings.

“The report of withholding the $800m US military aid seems to have proved a last straw on the camel’s back,” he added.

The developing political situation after the parting of ways by the MQM as a coalition partner in Sindh and at the centre, and its negative impact on political and local law and order situation further eroded share values as there were sellers but not many buyers even at the fall, he said.

Fears of further deterioration in law and order situation dominated trading as many investors were of the view that the recent happenings on the political front could lead to further erosions and preferred to keep on sidelines, another analyst Samar Iqbal said.

The important thing was that the leading market operators, financial institutions and foreign investors seemed to have decided to wait for restoration of law and order in the city before resuming normal activity.

Future contracts: After early pruning mostly in high-profile shares in oil and other sectors, the prevailing city situation further eroded share values and the midweek witnessed a change in the market psychology. Later a section of investors was back in the arena and covered positions at lower levels, mainly on fertiliser and oil counters under the lead of Fauji Fertiliser, Fauji Fertiliser Bin Qasim, Pakistan Oilfields and National Refinery.—Muhammad Aslam