THE share market last week opened the New Year account on an improved note after having passed through a virtual nightmare in the second half of the year 2008, which eroded $54 billion from the market capital and about 10,000 points from the KSE 100-share index at 5,753.18 points.

But the weekend recovery aided by reports that the Rs20 billion State Enterprise Fund will be operative by early next week, has raised hopes that the snap recovery will be extended during the next week alone on technical grounds, leading floor brokers hoped.

How, the market would behave in the new year was too early to predict in the prevailing charged political atmosphere and a threat of war between the two nuclear neighbours on the Mumbai carnage issue. But on technical grounds it was ripe for a grand technical correction at the current lower levels, analysts said.

It could well prove a long journey backed by enormous funds and investor perceptions of peace on the political front and his willingness to be back in the market to realise handsome capital gains.

“The proposed Rs20 billion market support fund appears to be a peanut in a market which has eroded well over Rs1,600 billion from the market capital during the current sell-off and is still in search of direction, which the new year could not provide at this stage”, analyst Hasnain Asghar Ali thinks.

An idea of the falling market may well be had from the fact that successive corrective steps including lower and upper circuit-breakers and finally floor under the KSE 100-share taken by the officials failed to check the massive downward drift.

Both the benchmark KSE 100-share index and the market capital fell to end the year at their lowest at below 6,000 points and Rs1,842 billion, after earlier having hit all time peak level at 15,622 points and Rs3,400 billion respectively.

The year that passed into history was the most devastating one both in terms of unprecedented price erosions and falling single session volumes hitting as low as about three million shares.

The market failed to respond positively to some positive developments after the trading was resumed, notably the amicable settlement of outstanding positions on the CFS MK-2 counter and a loud whispering about an imminent launch of the Rs20 billion market support fund as foreign selling weighed heavily against the sentiment.

The benchmark KSE 100-share index remained under pressure as leading base shares again remained under selling from the foreign investors and its junior partners including KSE 30-shares and all shares index also fell.

The market should have shown even the weakest signs of recovery as major issues have been settled and alone on technical ground investors should have been back at least on the blue chip counters at the current lower levels, some analysts said.

“What ails the market is not hard to find”, analyst Ashraf Zakaria said adding, “war hysteria, weak economy, fall in corporate productions owing to heavy load shedding, and absence of institutional or foreign support are some of the major depressants”.

It may not be that easy to put the market back on the rails despite the fact that there were more than one positives reasons that warrants technical rebound, he said but questions, “who will rope in the massively mauled general investor”.

Some others said things on the capital market were proceeding on the right direction and investors were expected to be back in the arena after the perception of peace on the borders gained strength.

“I think there is no harm in covering positions on some of the public sector issues, notably National Bank, PSO, Pakistan Petroleum, and Pakistan Oilfields,”, analyst Ahsan Mehanti said.

He said they along with some other could well be the bone of contention among the investors at the current lower level as the proposed market support fund is expected to resume its covering operations from these shares.

Another leading analyst said continued foreign liquidation on the blue chip counters at 12.6 per cent discount, notably oil, banking and some others continued to have its toll on other counters.

Forward counter: Speculative issues on the forward counter, on the other hand, remained under pressure throughout the week and did not follow the recovery trend on the ready counters.

PSO, MCB, Pakistan Oilfields, ICI Pakistan, Allied Bank, Habib Bank and some other leading shares were again worst-hit but without any deals.—Muhammad Aslam