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CONFLICTING reports about the PTCL-Etisalat deal dominated the trading on stock market as investors played on both sides of the fence in a holiday-shortened week. They did not take even a calculated risk as stakes stay too high in such situations.
But there were mid-week reports that the PTCL deal was intact after the renewed talks and that the final outcome will see the light of the day in the post-Eid meeting to be held in Dubai. Both, the Etisalat and the Pakistani teams will contemplate to finalize the transaction which had generated a good bit of speculative buying and bargain-hunting.
The news boosted the index by 189.34 points or 2.30 per cent in a single session before Eid holidays. The net rise over the week was of 119 points which added Rs51 billion to the market capital at Rs2,407 billion.
However, the PTCL itself received massive battering and fell below its benchmark price of Rs60 to Rs57 as investors unloaded their long positions in an apparent effort to buy at low levels if something positive came out of the current parleys between the high-ups of the two. It recovered partially at the end of the trading week.
Stocks, however, survived earlier negative fallout of the reports of cancellation of the PTCL sale deal with Etisalat as investors were fully prepared to receive the bad news after weeks of conflicting reports about the finale.
The chief victim, however, was the PTCL which offered both an opportunity and a financial risk to those investors who were willing to take risk and an attractive bait of capital gains below the Rs60 level.
Opinions were divided over the impact of the PTCL episode on the future stock trading. Some said the worst was over and market will respond to higher corporate earnings after Eid. But some others claimed further erosions in the PTCL could take a fresh toll of the broader market. The market’s highly oversold position could well prove a deciding factor in coming weeks.
Reports that Etisalat had failed in meeting its final payment obligation on October 28, initially sent shock waves among the investors followed by hasty unloading by weaker groups but larger fall was averted - thanks to the support at the dips on blue chip counters.
The PTCL came in for heavy selling and fell from its recent highs of Rs63 and ended well below its benchmark of Rs60 and analysts predict further fall in its share value during the post-Eid holidays trading as pent-up selling was still there.
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The KSE 100-share index finished after recovering from the early lows at 8,436.62, up 119.26 points in a holiday shortened week. It, at one stage, hit the week’s low of 8,135.49.
The poignant end of the PTCL episode was yet to come. It appeared logical as Etisalat had gone too far for no apparent reasons behind the price it chose to bid, analysts said.
It will be futile to hope against the hopes as one thing was clear that the Dubai-based bidder had some pressing financial second thoughts on the deal and had to swallow a bitter pill apparently at the cost of its international reputation, they said.
The PTCL episode just at the heels of the KSEC debacle after Kanooz al-Watan of Saudi Arabia backed out, may have had dealt a serious blow to Pakistan’s massive future privatization programme for no fault, some others said.
Reports that the minister of privatisation was to visit Dubai for further talks on the issue with the Estisalat management, or the case had been sent to the Cabinet Committee for final word on the deal were just procedural matters. This may not have any positive bearings on the Etisalat decision, they said.
The market was preparing during the last about two weeks for an eventual Etisalat back-out and those who had read enough in the happenings unloaded their long positions in it and were sitting pretty comfortable on the sidelines.
I think from now onwards the market was expected to follow its natural course as one of its major irritants had been removed and the post-holiday trading could witness a wave of fresh buying, brokers said.
Active short-covering in the bank, oil and cement shares limited the market fall as a section of leading investors covered their positions at lower levels.
The National Bank, the MCB, the OGDC, the Pakistan Petroleum, the Attock Petroleum, the Colgate Pakistan, the Siemens Pakistan, the United Sugar, the Pakistan Refinery, the Bank of Punjab, and the D.G.Khan and Fauji cements and some others performed credibly well. These did not allow the market to be carried away by the negative news of Etisalat for failing to honour the payment commitment.
The Rafhan Maize, Javed Omer, Wyeth Pakistan, Artistic Denim, Shell Pakistan, Packages, the PNSC, Glaxo-SKF and Atlas Honda were leading among the losers.
Interim corporate announcements both from the PSO at 60 per cent cash and 20 per cent bonus shares by PICIC were on the higher side of the market expectations and evoked good buying interest at lower levels halting the market decline triggered by adverse comments on the PTCL deal.—Mohammad Aslam
