DESPITE the mid-week technical correction, stocks managed to finish on an improved note during the last week, as the investors had build long positions on selected counters, following the lead of the institutional traders.

A snap rally at the fag-end of the week allowed some leading shares, notably the PSO, on the market talk of its early sell-off, to breach through its circuit breaker, as a section of leading investors were out to have its shares irrespective of the price tag. It ended sharply higher around Rs142.30.

The KSE 100-share index recovered 15.40 points and ended close to next target of 1,800-point level, but failed to break the barrier owing to strong resistance by the bears. It ended at 1,798.57 points, only short of 1.47 points to hit the coveted level. The market capitalization also rose to Rs419.711 billion, from the previous Rs415.041 billion, a net rise being of the order of Rs4.670 billion.

The index though made abortive attempts during the week to breach through the psychological barrier of 1,800 points. The bulls remained at the receiving end in an oversold market and suffered heavy losses in the battle of wits.

Despite having risen by about 45 per cent during the post-Sept 11, and the uneven performance in the backdrop of war fears with India, the KSE now has been dubbed by the leading foreign funds as a “low-risk and high-return market”.

“No one possibly could stop its march beyond the index level of 1,800 points as board meeting of most of the mega issues, including the Hub-Power at the fag-end of the current month could generate buying euphoria on the strength of the dividend announcements”, analysts said.

Investors are now taking positions on safe zones for capital gains and they are sure to be on the winning side during the next couple of weeks, they added.

But from now onwards, it may not be that easy for the bears to contain the bull-run, as much has changed on the local front owing to strong presence of the US outfit here and there. Local political polarization may now have no relevance to the stock business.

The mid-week snap rally was, therefore, not unexpected it has strong basis behind it. Institutional traders led the market advance with a bang as some of the leading shares breached through their price circuit breakers as bulls turned near-crazy.

After briefly touching the week’s peak level of 1,798.57 points, the KSE index finally ended around this level, which incidentally proved to be the week’s best bid. Analysts said it is a sound level and the next week may witness some big changes in the market psychology.

Energy shares led the market recovery on active short-covering triggered by a modest downward adjustment in selling prices of the POL products. The oil marketing companies have been expecting a big cut in the backdrop of previous two successive increase.

An idea of active short-covering may well be had from the fact that all the leading shares, virtually raced towards their pre-reaction levels under the lead of blue chips.

The heavy battering being received by the dollar, notably in the kerb market reflects that the investors are in for big catch in coming sessions.

“The money is outflowing from the dollar to stocks like anything on panic-selling after it was quoted at a discount of 77 paisa against the euro”, one money changer claimed, adding, “liquid funds also flowed in euro which was quoted at Rs60.25 and Rs60.40 in kerb against the dollar close of Rs59.57 and 59.63 for buying and selling, respectively”.

“Essentially, it was the advent of new account institutional buying, which lured everyone back into the rings”, analysts commenting on the snap rally in the backdrop of the overnight panic-selling said. “As a matter of fact the market has over-reacted to Monday’s events, including the death penalty for Omar Sheikh in Daniel murder case”.

Negative external news, notably from across the border will continue to pour in, but investors seem to have learned to live with it and there is a possibility of a big run-up fuelled by the current lower levels.

“The market is still in an oversold position and could attract any amount of covering purchasing at the current attractively lower level provided institutional traders continue to play their due role”, brokers said.

The PSO, Mehmood Textiles, Aventis Pharma, Lever Brothers and the Wyeth Pakistan were leading among the gainers, followed by the ICP Mutual funds ahead of the board meeting, the National Bank after the announcement of 12.5 per cent cash dividend, the Pakistan Oilfields, Shell Pakistan, Millat Tractors, Clover Pakistan, Lever Brothers, the BOC Pakistan, Chakwal Spinning and several others.

Losers were led by the Ellcot Spinning, Blessed Textiles, Javed Omer, the SK&F, the Grays of Cambdrige, Siemens Pakistan, Shafiq Textiles, Nestle MilkPak and the Dreamworld, but losses elsewhere were mostly fractional and reflected the lack of support rather than the large selling.

Unlike the previous couple of weeks, when the trading volume has fallen to a low ebb of 202 million shares, it rose to 409 million shares during the last week, thanks to large turnover in some of the leading shares.

The Hub-Power, the PTCL, the PSO, the National Bank, together accounted for about 65 per cent of the total, while the KESC, Engro Chemical, Fauji Fertiliser, Telecard, the MCB, the D.G.Khan Cement,the ICI Pakistan, Sui Northern, Chakwal Cement, the FFC-Jordan Fertiliser and many others followed them.

FUTURES CONTRACTS: Speculative issues on the forward counter also followed the lead of the ready counter parts but the week’s highlight was provided by a big rise in the share value of the PSO. The Hub-Power, the PTCL, the MCB, the ICI Pakistan, and the Engro Chemical were also actively traded.—Muhammad Aslam