Stocks greeted the news of the presidential referendum, due on April 30, with lots of reservations but did not face hasty selling as the leading investors held on to their positions, allowing the market a temporary breathing space.

However, the mid-week rally reinforced the investor-perception that a “big yes” in the referendum could well mean continuity of the current economic reform, and a steady inflow of foreign aid leading to a robust stock market.

But the future outlook appears uncertain. Investors are now focusing on post-referendum scenario. They are not inclined to go in a big way even at the falling prices, having perhaps a fair idea of the things to come, including a landslide victory for the president. What worries them is the political reaction and law and order situation.

The mid-week rescue operation launched by the leading institutional traders did work but inconsistency associated with their trading behaviour did not lead investors to follow them and did not ride the bandwagon for obvious reasons.

The falling daily volumes speaks eloquently of the investor’s mind, his perceptions and his willingness, to take calculated risks in the developing political scenario.

The KSE 100-share index managed to finish above the week’s low level of 1,826.14 points, thanks to mid-week snap rally, it finally ended higher by nine points at 1,858.62, raising the market capitalization by Rs2 billion at Rs431 billion.

“The rigid positions taken by the contenders could lead to political polarization”, Mustafa Iqbal at the Moosani Securities suspect, adding, “the entire exercise is feared to end up in law and order situation to which the market is essentially sensitive”.

While all major political parties have rejected ‘referendum’ on the ground that it was unconstitutional and have announced to boycott the referendum, the government claims there is no deviation and it will be held allowing the people to speak.

“A big showdown may not be around, investors dislike the idea of uncertainty, which will follow owing to rigid positions taken by the contenders”, Faisal Abbas, a leading stock analyst at the AHRA says.

The fall of daily turnover, below the 100 million share mark speaks of investor-perceptions about the future shape of things and their investment priorities, they added.

But stock analysts at Aziz Fidahusein & Co are not that skeptical about the future share business outlook despite a mixed reaction to the presidential referendum and hope the market would continue to find support around the index level of 1,850 points.

“What should be the new re-entry point”, is the question being mooted by bulls and an answer to it will set the future course of the market, Salman Ahmed of Al-Mal Securities says.

However, general reaction is that the market could resume its upward drive in due course after the investors have fully digested the psychological impact of the coming referendum.

Leading business organizations, including the KSE high-ups have already welcomed the referendum, which will lead to the continuity of the existing economic and financial policies for another five years.

There are predictions that the consolidation forces would be at work during the next couple of sessions to restore the sanity to stock trading, some leading analysts believe.

Big gainers were led by the SK&F and the Quetta Textiles, which posted gains ranging from Rs2.65 to 4, followed by the 13th ICP, Ayesha Textiles, Singer Pakistan, Bata Pakistan, Transpak Corporation, Pakistan Tobacco, Dewan Textiles and many others, rising by Rs1.50 to 2.50.

Losers were led by the Lever Brothers and Fateh Textiles, off Rs11 to 19.05. They were followed by the Wyeth Pakistan, Rafhan Bestfoods, and Nestle Milkpak, off Rs5 to 9.90. The Shell Pakistan, Escort Bank, Attock Refinery and Gillette Pakistan also fell by Rs1.45 to 2.95.

Both Fateh Textiles and Wyeth Pakistan, which have declined sharply over the last couple of weeks resumed their upward journey and both ended with smart rallies.

Floor brokers said although a section of investors still fears law and order situation as leading parties are opposed to the referendum and have decided to boycott it. But whether or not voters will follow them lead to uncertain outlook and fears of violence.

Much will depend of the public meetings planned by the political parties by the end of the current month and whether or not the government allow them or not,which could lead to a big showdown,some dealers fear.

Owing to early sluggishness because of two opinions about the referendum, trading volume fell sharply to half a billion share mark but unlike the previous weeks,there were no massive activities even in the leading shares such as the PTCL and the Hub-Power. But FFC-Jordan Fertiliser swung into activity followed by reports of a financial package and was actively traded in each session on active support at its below par value level.

Other actives were led by the PTCL, the Hub-Power, ICI Pakistan, PSO, Dewan Salman, Sui Northern, National Bank, Pakistan PTA, Nishat Mills, Engro Chemical, Bank of Punjab and several others.

FORWARD COUNTER: Forward counter also followed the lead the ready section where bulk of the support remained confined to PSO,ICI Pakistan, PTCL, Hub-Power and FFC-Jordan Fertiliser. Prices generally rose after initial fall.—Muhammad Aslam.