KARACHI stocks recovered from the mid-week lows during the last week, as a spate of covering purchases triggered by good dividend by the market leaders, helped reinforce the investor- perception of a bull market.

But all eyes remained focused on the Musharraf-Bush meeting, due on Nov 10 in Washington, and market talk of a big aid package and loan write-offs, which will set the trend for the stocks to follow.

Reports from across the Line of Control in Kashmir and Afghanistan were not that encouraging, which took their toll on some counters, as weak-holders had to sell in a bit haste.

The large Badla volume also affected the mid-week trading but the pay-outs by the Hubco and the PTCL allowed the market forces to play their due role in pulling, the market, out of the current hesitancy. The announcements of good dividend from the market leaders — the PTCL and the Hubco — ended the market’s initial sluggishness, although both have to pass through a massive correction before bouncing back on strong institutional and foreign buying.

A final cash dividend of 22 per cent and 24 per cent by the Hubco and the PTCL, respectively carrying earning per share at the rate of Rs9.50 and 3.75 on a 10-rupee share, on huge after-tax profits lured investors back into the market leading to the reversal of the trend on the upside.

What was more important was that the PTCL after-tax profit of over Rs18 billion on sales of Rs62 billion, was well above the initial market analysis and worked well, as far as its share value was concerned.

Earlier, it appeared to be the complete rout of the bulls as selling from the general investors and some leading institutions signalled the advent of bear-rule, at least for the near-term as they successfully made below market expectations dividend by the Hubco an excuse to drive bulls out.

After falling to 1,340.88 points, earlier in the week owing to heavy selling in the Hubco, the KSE 100-share index finally ended recovered at 1,382.67 as compared to 1,399.81 a week earlier.

The market capitalization though rose to Rs335 billion after having touched the lowest for the week at Rs328 billion, showed a decline of Rs8 billion from Rs343 billion, a week earlier.

“The evidence of foreign selling was hard to find, but some claimed it was there, though not very aggressive”, a leading stock analyst at the Finex Securities claims, but the “erosion of Rs9 billion from the market capitalization at Rs333 billion tells a different story”.

A final cash dividend of 22 per cent (an interim of 17 per cent already paid) with per share earning (EPS) of Rs8.60 on a 10-rupee share was not that bad and should have been welcomed by the investors as it led to a good beginning after the last two years’ stand-off because of litigation on power rates but bears were adamant to tilt the balance in their favour. The EPS was negative last year and Rs5.79 in 1999.

However, when a good sense returns after the current psychological euphoria is over, bears may have some rethinking on the subject as the profit of Rs10 billion could well prove an attractive bait for them in the weeks to come.

“What seems to have worried investors was the report that the distribution of the dividend has been linked with the lenders’ approval”, stock analysts at the W.E. Financial believe”, adding it could well mean delay in payment as has been in the case of interim, as the lenders may not be in that hurry to approve it”.

But the reaction appears to be more psychological than real, and bulls could fight back to tilt the balance in their favour, as its current lower levels are attractive enough for any prospective investor.

Its share value fell from the highs to Rs20.60 after the application of circuit-breaker by the KSE authorities to forestall further decline in its share. The volume was modest as it is being quoted spot. On early anticipatory support it touched the highest of the day at Rs23.80 and ended at the lowest for the day.

Stock analysts at the Moosani Securities predict now investors’ are focused on the board meeting of the PTCL on Nov 8 and lower-than-the-market-expectation dividend may again jolt the market. “The market may take some time to change the track owing to the enhanced Badla volume and fresh float”, stock analysts at the Kausar Abbas Bhayani predict adding, “the corporate news are encouraging but their impact has already been built into the current hike”.

Minus signs dominated the list as most of the overvalued blue chips fell like the house of cards. Among the MNCs, big losers were led by the Shell Pakistan, Al-Ghazi tractors, the ICI Pakistan, Engro Chemical, Dawood Hercules, and the Lever Brothers. The mid-week short-covering allowed them to finish recovered. Other prominent losers were Adamjee Insurance, the EFU Life Insurance, National Refinery and the PSO.

Advancing shares were led by the Siemens Pakistan, the 4th ICP, the 9th ICP Mutual Funds, Tariq Glass after a good dividend and Glaxo-Wellcome Pak, Lever Brothers, Central Insurance,and several others.

Trading volume fell sharply from a billion share mark to 533 million shares owing to the absence of leading sellers at the falling prices. The bulk of it was again shared by the PTCL, the Hub-Power, the ICI Pakistan and the Sui Northern Gas.

Other actives included the Engro Chemical, the PSO, the MCB, Nishat Mills, Fauji Fertiliser, Adamjee Insurance, Japan Power, Dewan Salman and several more on other counters, including the textiles and chemicals. —Muhammad Aslam.