KARACHI, Oct 30: Pakistan’s acceptance of Indian proposals for confidence-building measures has a positive impact on the stock market on Thursday as investors made modest short-covering on selected counters, but the rally appears to be inconclusive and deceptive.

That is perhaps why the KSE reacted cautiously to the current peace overtures and did not go all out for a big catch, although technical factors warranted a bullish reaction in an oversold market.

The KSE 100-share index did resist fresh decline and recovered to close net higher by 10.74 points at 3,796.48 on the strength of PSO, PTCL and Hub Power, which together hold 50 per cent weightage in it. The broader market remained terribly weak.

The market should have responded more favourably to reports of higher corporate earnings by some of the leading companies, notably PTCL, National Bank and some others, and falling volumes tell investors are still in two minds about the direction and are inclined to book fresh profits where due rather than resuming covering operations.

The acceptance by Pakistan of India’s proposals for confidence-building measures may not immediately ease the prevailing tension and mutual distrust between the two warring neighbours could certainly pave the way for some more useful exchanges.

“It was essentially a technical rebound but did not reflect investor’s future perceptions about the direction of the market,” analysts said, adding “but going by the earning reports there should be a big stop to further price erosions.”

The market sentiment in part was also influenced favourably followed by reports that the PSO issue has been referred to the Economic Coordination Committee of the cabinet to sort out the contentious issues linked to its sell-off to one of the short-listed buyers is expected to end the current speculation and manipulation of its share.

PTCL first quarter profits swelled to over Rs6 billion or 27 per cent, while National Bank reported 98 per cent improvement in its working results for the last nine months’ operations. The MCB board was due to meet on Thursday (Oct 30) and analysts predict an increase of about seven per cent in its earnings for the nine months.

But some others said the market might witness a lot of selling in some of the overvalued shares for replacement buying on other counters, notably Oil and Gas Development Company Limited (OGDCL), which made its debut on Wednesday at the fixed price of Rs32 per share and steadily rose to finish at Rs42.80 after hitting the day’s peak level of Rs44.40 on another 6m shares, the total during the two sessions being 13m shares.

The scramble for OGDCL share and its maiden performance on the KSE indicates that it could well be an envy of investors who are lucky to get it at the official price of Rs32.

The public subscription for its 2.5 per cent or 215m shares, including green shoe option, will open on November 10 and will close on November 14 and is expected to be massively oversubscribed.

Although gainers trailed far behind the losers despite modest rise in the KSE index, some of the leading shares managed to finish partially recovered under the lead of Fauji Fertilizer, Engro Chemical, Pakistan Oilfields and PSO, up by Rs2 to Rs6.55.

Prominent losers were led by Javed Omer, Thal Jute, Gatron Industries, National Refinery, Pakistan Refinery, Pak-Suzuki Company, Pakistan Cables, BOC Pakistan, Pakistan Services, Al-Ghazi Tractor and Bhanero Textiles, off Rs4 to Rs9, the largest decline of Rs30 being in Unilever Pakistan.

Trading volume showed a modest rise at 147m shares from the previous 111m shares but losers maintained a strong lead over the gainers at 176 to 54, with 26 shares holding on to the last levels.

The active list was topped by PTCL, up 80 paisa at Rs34 on 35m shares followed by PSO, higher by Rs6.55 at Rs242.50 on 24m shares, Hub-Power, up 55 paisa at Rs34.25 on 19m shares, FFC-Jordan Fertilizer, lower 20 paisa at Rs16.60 on 12m shares and D.G. Khan Cement, steady by 15 paisa at Rs36.20 on 8m shares.

Other actives were led by Dewan Salman, lower 15 paisa on 4m shares, Fauji Cement, off 50 paisa also on 4m shares, National Bank, easy 20 paisa on 4m shares, Pakistan Oilfields, higher by Rs3.95 on 3.655, shares and Maple Leaf cement, lower 20 paisa on 2m shares.

FORWARD COUNTER: PSO led the advance on strong covering purchases, up Rs4.54 at Rs242 on 5m shares followed by Hub-Power, higher by 55 paisa at Rs34.25 on 3m shares, PTCL, up 74 paisa at Rs33.95 on 2m shares, FFC-Jordan Fertilizer, steady five paisa at Rs16.60 on 1.415m shares.