Throughout the last week, stocks danced to the tune of reports emanating from the tense border situation and diplomatic offensive to win peace for the warring nuclear neighbours but in the final analysis behaved orderly amid hopes that the danger of war will be averted through big powers’ intervention.

However, unceasing discipline remained the hallmark of the entire trading activity as no investor was willing to hold long positions until clear peace signals were visible.

Despite weekend selling, the overall performance of the market was credibly well as was reflected by an increase in the index and the market capitalization.

The Almaty conference may not have reinforced the investor perceptions about the easing of the Indo-Pak military standoff, its fallout on the regional stocks markets was pretty good as was reflected by 2.5 per cent increase in the KSE 100-share index and the massive short-covering at the lower levels.

Investors were not discouraged by the Indian prime minister’s “firm ‘No’” to talks with president Musharraf or Pakistan’s rejection of joint petrol along the LoC in Kashmir and its subsequent denial but followed their own assessments despite the fact that there was no change in ground realities including tense border situation.

“The war hysteria now may have no relevance to the developing situation in the backdrop of a massive peace offensive launched by the big powers”, said a member of the KSE adding, “it is not that easy to ignore the international mediation for the two nuclear nations being on the threshold of a conflict”.

Basic positive market fundamentals are at work as the steep increase in the market capitalization to a coveted mark of Rs400 billion and hefty rise in the index, which breached through the psychological barrier of 1,700 point at 1,724.00 before weekend selling pushed it down to close below the coveted level at 1,691.29,up 28 points from the previous week’s close.

Despite disturbing news from the Almaty moot and Vajpayee’s ‘No’ to the President, stocks maintained an optimistic outlook as an immediate threat of Indo-Pakistan war was averted followed by Sino-Russian peace initiative amid hopes of Musharraf-Vajpayee meeting in Moscow followed by the Russian president invitation.

Energy shares under the lead of PSO, which breached through its circuit breakers, and some other pivotals including Adamjee Insurance, Engro Chemical, ICI Pakistan, Fateh Textiles, Wyeth Pakistan and Shell Pakistan, led the market advance on strong buying at the lower levels and so did some other pivotals including Lever Brothers and Grays of Cambridge. But at the fag-end of the week, most of them finished reacted on renewed selling.

The current lower levels most of the leading shares have attained provide an attractive bait for any investors if the fears of war with India are allayed and both the countries resolve their issues through talks as they have committed at the Almaty moot.

The ice may not have broken on the tense border situation. “Indian prime minister’s offer of joint patrol along the LoC to check cross-border infiltration appears to be a positive development,opening the way for bilateral talks on other issues”, a leading business and stock analyst Alireza said.

The goal of peace may still be elusive but positive initiatives from the warring neighbours including proposal of joint petrol on the LoC and unconditional talk offer may eventually lead to peaceful resolve of all the outstanding issues, hopes Faisal Abbas of AHRA.

Vajpayee’s offer of joint patrol on the LoC has reinforced the investor perception that tense border situation may ease leading to the withdrawal of forces, he added.

“The visit of the US deputy secretary of state followed by the US defence secretary has raised hopes that peace initiatives may finally bring sanity to the talk of war,” said Salman of Al-Mal Securities. The same view was expressed by Raheel Moosani of Moosani Securities who said that the current stance reflects the fears of a possible war are now fading.

It was perhaps in this background that investors and bargain-hunters did not want to miss the rising market and covered positions at the lower levels almost on all the counters.

Big chunk of support apparently originated from the institutional traders and their lead was actively followed by the general investors and speculators.

Top gainers were led by IGI Insurance, PSO, Fateh Textiles, Wyeth Pakistan, and Lever Brothers, which finished the day with smart gains.

Other good gains included Adamjee Insurance, National Refinery, Shell Pakistan, Crescent Steel, Engro Chemical, Al-Ghazi Tractors, Aventis Pharma, and ICI Pakistan.

Losers were led by Central Insurance, Lakson Tobacco, Rafhan Maize Products, Pak Re-insurance, Shafiq Textiles, Central Insurance Packages, and several others.

Trading volume of rose to 700m shares from the previous 600m shares as investors covered positions in the pivotals at the lower levels.

More than 60 per cent of the volume went to the credit of most active scrips, notably Hub-Power and PTCL followed by FFC-Jordan Fertiliser, National Bank, Sui Northern and ICI Pakistan.

Other actives were led by Pak PTA, Engro Chemical, MCB, Adamjee Insurance, Bank of Punjab, KESC, Telecard, Fauji Fertiliser and several others.

FUTURE CONTRACTS: Hub-Power came in for massive alternate bouts of buying and selling as speculative forces tried to tilt the price balance in their favour. PTCL followed it,although their on-balance close was lower.