The stocks halted a persistent downward drift witnessed during the last two weeks. Investors covered their positions at an attractively low level on all counters, but the activity lacked aggressiveness associated with a bull market.

Low volumes reflecting the absence of institutional traders was the hallmark of the last trading week. Investors were in two minds about the future direction of the market owing to a combination of negative factors, including the MMA’s threat to launch protests if deal was not signed by the government on the LFO.

Prime Minister Jamali’s visit to the US and positive comments made by President Bush on the functioning of the democracy in Pakistan generated a lot of interest in the market. This in turn reversed the downturn.

The most interesting feature in entire week’s trading was that some secondary issues came in for strong support under the lead of Fauji Cement, the Pak PTA and some others — signalling a major shift from high-profile to low-priced issues which ensures lofty capital gains in a bull market.

Stocks, therefore, recovered from their previous lows aided by positive news about the disinvestment of some mega companies including the PSO. This again lured the investors back into the market but covering operations were highly selective as was reflected by light traded volumes.

Higher corporate announcements, the US pat on the Jamali’s government allayed the fears that the setup may wound up. The attractively low rates and easy money supply allowed the market to rise from the last two weeks lows.

But what seems to have enthused investors most were the reports that the Privatization Commission intends to unload 215 million shares of the Oil and Gas Development Corporation (OGDC), one of the mega issues after the PTCL at Rs32 per share during the current month. The sell-off of 3.5 per cent shares of the National Bank are also billed for this month.

Some analysts anticipate the final bidding date for the disinvestment of controlling shares of the PSO too, will be announced during the current month.

Disinvestment programme through the bourses will again lure investors back into the market allowing it to resume its liquidity-driven rally during the coming weeks, they said.

News from the political front are also a bit encouraging followed by a strong whispering that the government and the MMA are close to sign an agreement on the LFO ending the protracted standoff. It could add to the strength of the market if signed during the next couple of weeks.

“After having fallen below the important index of level of 4,000 points, the market seems to have resumed its upturn, reinforcing the investor-perception that it has found a viable cycle to swing either-way in future between 4,000-4,500 points”, said a leading stock broker.

However, falling volumes did worry analysts as post-decline proceedings were not being fully participated by the general investor and the leading retailer. That was perhaps why it appeared difficult to predict whether or not the correction was overdone.

Opinions were, therefore, divided over the future direction of the market as covering operations were mostly confined to the institutional traders, while others watched the situation from the outside.

Investors, notably retailers most of the time stayed on the sidelines and generally played safe despite good dividend announcements apparently awaiting further developments on the corporate front.

Active short-covering in some leading textiles, fertilizers, and oil giants, notably the PSO and the Shell Pakistan despite cut in petroleum prices in fortnightly revision led the market to further declines. After moving either-way, the KSE 100-share index finally managed to finish high above the important level of 4,000 points at 4,192.39, up by 29.16 points on the strength of leading base shares, notably the PTCL and the PSO.

“I presume bulls have in mind the index level of 4,000 on the lower side and 4,500 on the higher and intend to play in between at least for the near-term”, predicted a leading stock broker”. I don’t think it has the appetite to fall below this level owing to the relative strength of the corporate sector, higher dividend and the EPS.

The progressive increase in interest rates on the government bonds and Treasury bills were welcome but they could not absorb the entire floating liquid money, while stocks had the capacity to have it, he said.

“Fears that the Rs50 billion bonds to be issued during the next three months could cause outflow of funds from the share market were unfounded as investors have their own investment perceptions”, he added.

Trading volume also rose from the early meagre total of 140 million to 322 million shares but was still far below the average daily total of 450 million shares.

Analysts said the last two weeks’ massive sell-off, which eroded 600 points or Rs100 billion from the market capital had badly shaken the investor-confidence in share business and they were in search of new investment avenues.

Whether or not the revival of institutional support at the current low levels will reinforce the retailer’s confidence in the market’s ability to rise will be seen during the next couple of sessions, they said.

The recovery was led by heavy short-covering in energy, banking, cement, auto, chemicals and the leading shares on other counters amid active trading.

Gainers were led by the EFU General and the Life Insurance, the Shell Pakistan, the Shahtaj Sugar, the Packages, the Tri-Pack Films, the Clover Pakistan, Ghani Glass after the announcement of 15 per cent dividend plus bonus shares of 35 per cent.

Losers were led by the Jahangir Siddiqui and Co, the BOC Pakistan, the Glaxo-SKF, the Atlas Honda, the National Refinery and the Pakistan Refinery — largest decline being in Javed Omer Vohra. Most of them recovered from the initial lows after mid-week on strong covering purchases under the lead of the auto, cement, pharma and chemical shares.

Trading volume fell sharply from the peak level of 2 billion to a billion shares bulk of which went to the credit of the PTCL, the PSO, the Hub-Power, the D.G.Khan cement, the FFC-Jordan Fertiliser, Sui Northern and some others.

FORWARD COUNTER: Speculative issues on the forward counter showed mixed trend, while the PSO managed to finish with good gains. The PTCL fell and so did others amid either-way movements.—Muhammad Aslam