After remaining highly erratic most of the week, the stocks recovered modestly at the weekend, and raised the hopes that the current downward drift was overdone.

But opinions were still divided on the future direction of the market as some claimed the market had already hit the bottom, while some others said that further correction was overdue.

The snap robust rally at weekend, however, was widely welcomed as it not only restored the investors’ confidence in the share business but also generated a lot of fresh buying at lower levels on all the counters.

A part of the last two week’s price erosions was wiped out in just one go, reflecting that the there was no change in the basic fundamentals and the correction was overdue after the meteoric rise.

After eroding about 750 points from the KSE 100-share index and Rs140 billion from the market capital, the bulls and financial institutions may have to make extra effort to put the market back on rails, analysts said.

Earlier in the week, stocks received massive battering as all leading investors turned into sellers in the backdrop of decline in the interim corporate earnings of some leading MNCs.

There were several other negative factors which contributed to the market’s decline from the recent all-time highs, notable among those was the withdrawal of the financial support and the consequent bargain-hunting by the speculative forces.

Opinions were divided over the market’s future outlook but leading analysts said,” it was heading to find its realistic levels both in terms of index level and the market capital”.

After the initial rise aided by the Moody’s positive rating, both the KSE 100-share index and the market capital suffered fresh setback of 24.10 points at 3,945.36 as compared to 3,969.46 points. The lowest and highest touched at 3,850.12 and 4,005.40 points, respectively. Early losses were recouped by the weekend rally. The market capital fell from the previous week’s Rs862 billion to Rs837 billion.

The early robust rally was triggered by reports that the Moody’s Investor Services had upgraded the Pakistan’s sovereign foreign currency rating to B2 from B3 owing to the better management of foreign debt. The rally could not be sustained as the follow-up support turned shy. The market’s initial positive reaction to new rating, however, was well-reflected by an addition of 59 points in the KSE 100- share index, but as the financial support turned shy it finished with a modest fall of 3.84 points at 4,001.56 as compared to 4005.40 points a day earlier.

Analyst said, although the latest rating takes Pakistan within the five notches below the investment grade but still keeps it in the speculative grade. The Standard & Poor’s on the other hand put it at B level during its last December rating.

“The latest upgrading may have a negative impact on the financial markets as it signals a decline in the country’s risk premium”, he said adding “the stock market having very limited presence of foreign funds gave a positive reaction as was reflected by the early rise of 59 points in the index”.

However, in the absence of strong financial support bargain- hunters also played safe on both sides of the market without taking long positions on any of the counters.

Leading floor brokers expected some improvement in the market’s stance as the board meetings of some of the leading companies including urea giants such as the Engro Chemicals, the Fauji Fertiliser, the ICI Pakistan and many others were held during the current week but their quarterly working results declined.

The board of directors of the PSO also met here but its interim sales, as well as the post-tax profit were maintained at the previous level of one billion rupees.

However, its share value received massive battering owing to the conflicting reports about its final bidding date for its sell-off to one of the short-listed bidders.

“The market needed fresh stimulants including fresh money to boost the investor’s morale dampened by the political standoff”, analysts said adding, “until the leading investors decide to break the bearish cycle bears would keep on eyeing the index level of 3,500”.

Owing to steep increase in the lint cotton to Rs4,240 per maund, including 15 per cent sales tax, the weakness of the textile sector was progressively engulfing the entire market for obvious reasons, they said.

Being one of the largest sectors of the listed companies it influences the market in more than one ways but mostly on the lower side”, they add.

Bulk of the selling remained confined to leading shares, notably the PSO, the PTCL, the Engro Chemical, the ICI Pakistan and the Pakistan Oilfields. Some other blue chips rose modestly under the lead of the Hub-Power, the FFC-Jordan Fertiliser and the Sui Northern Gas.

Shares of the banks showed modest rise, while the market decline was led by energy sector as the leading shares fell on renewed selling. Auto shares ruled mixed, with the exception of the Al-Ghazi Tractors, whose directors had announced an interim dividend of 100 per cent. Its 10-rupee share already ruling 17 times high against its face value stayed firm at Rs174 after hitting the day’s lowest and highest at Rs171.00 and 174.50, respectively.

Prominent gainers were led by the Nestle MilkPak, Jahangir Siddiqui Bank, Lawrencepur Woollen, Ahmed Hassan Textiles and the Clariant Pakistan.

The market decline was led by the overvalued energy and auto sectors, and blue chips on other counters on persistent selling from all and sundry.

Losers were led by the Attock Refinery, Pakistan Oilfields, Pakistan Refinery, Millat Tractors, Aventis Pharma, Century Papers, Ferozsons Lab and the Pakistan Services, Indus Motors, Millat Tractors, Pak-Suzuki Motors and many others.

FORWARD SECTION: Barring the PTCL which rose modestly over the week and the FFC-Jordan Fertiliser all others shares fell, but managed to close higher from the mid-week lows. The ICI Pakistan, the Engro Chemical, Fauji Fertiliser and the MCB came in for modest support at the lower levels late in the week.—Muhammad Aslam