THE fall of Kabul and other big cities, following the Northern Alliance victory and backed by the heavy US-coalition bombing lured the investors back into the market. They covered positions on selected counters, although the goal of peace in Afghanistan still appears elusive.

The stocks last week, therefore, recovered from the early lows as the buying-euphoria associated with the president’s US visit and his meeting with President Bush amid market talk of a big aid package and debt write off paved the way for snap bull-run at the lower levels.

The market did resist larger decline after the fall of Kabul on the perception of end of Afghan war but it is too early to speculate about the future shape of things there. The index recovered from the weekly low of 1,338.00 point but it was doubtful whether or not it could sustain the resistance level of 1,350.00 point. It finally ended the week at 1,380 points.

The retreat of the Taliban from their strongholds and the victory of Northern Alliance appears to be another destabilizing factor owing to the anticipated chaos in the neighbouring country after the fall of Kabul to the opposition.

But it is too early to predict whether Taliban are out of the war or could strike back as the conflicting reports suggest and until then investors are expected to play safe, dealers said.

“What will be the fallout of the end of the Afghan war and the Northern Alliance victory on Pakistani economy could worry investors and most of them will not opt for all-out support at the current dips”, they added.

Selling in some of the blue chips, notably in the ICI Pakistan was so aggressive that the KSE authorities have, under the rules, to apply circuit breaker to forestall further decline in their share values.

It was massive unloading by the institutional traders in the high-profile shares, notably the Hub-Power, the PTCL, the ICI Pakistan, the PSO, and Sui Northern which did not allow the market to have even a technical breather to lure bulls back in the market at the dips.

The Victory of the Northern Alliance triggered speculative selling in them at the lower levels at the fag-end of the week. The dividend announcement from Millat Tractors, the ICP Mutual Funds, General Tyre, Pakistan Paper Products and some others were on the higher side of the market perceptions but failed to check the bear selling.

However, the earlier reaction to the Musharraf-Bush meeting and reports of $1 billion aid package and promise of debt write-off was positive as the KSE 100-share index early rose to touch the psychological barrier of 1,400 points.

But late selling pushed it close sharply lower as the initial run-up could not be sustained.

But some re-thinking on the entire spectrum of the Pak-US relations in the backdrop of attack on Afghanistan and logistic facilities provided by this country,the package was billed as “peanut”, says a leading broker.

“Investors were eyeing a debt write-off of $12 billion and an aid package of at least $6 billion to compensate for the Afghan war, both foreign and local business losses of Pakistan but announcement from Washington disappointed them”, stock analysts said.

But analysts at the W.E. Financial Services say to expect beyond $1 billion, in addition to already given benefits allied to lifting of economic sanctions, may amount to “asking for the moon”, but the aid pipeline may not have been shut “it has just been reopened”.

“Investors are expected to be back in the market after having some second thoughts on the US aid package as combined with other trade benefits, the figure may look pretty formidable”, stock analysts at the Finex Securities believe.

Some independent analysts say the market will take a definite shape after the current aid-related euphoria is over and what the economy has gained at the end of Afghan war will determine its future direction.

“The fallout of Afghan war could work both ways of the market but it is too early to have a bullish overview of the developing scenario”, stock analysts at Moosani Securities predict.

It was perhaps in this background that the market failed to sustain the early run-up and fell across the board despite good performance turned in by the PTCL and Sui Northern. Weakness of the Hubco, the ICI Pakistan and the PSO weighed heavily against the underlying sentiment.

The largest decline of Rs5.30, 16.00 and 18.60 were noted in the Shell Pakistan, Rafhan Maize Products and Lever Brothers Pakistan, which remained under pressure throughout the session followed by conflicting reports about the sales and profits.

Other prominent losers were led by the EFU Life Insurance,the PSO,the BOC Pakistan, Glaxo-Wellcome, the ICI Pakistan and Packages, which suffered sharp fall.

Millat Tractors was leading among the gainers, which responded favourably to a record cash dividend of 150 per cent, followed by the Nestle MilkPak, the ICP SEMF, 8th and 13th ICPs, in response to good dividend, Berger Paints, Karam Ceramics, Murree Brewery, and General Tyre, which rose modestly.

The trading volume remained on the higher side thanks to active bouts of buying and selling in the current favourites under the lead of the PTCL and the Hubco, which turned out massive activities in each session and accounted for 70 per cent of the total volume of about 700m shares.

Other actives were led by the PSO, the ICI Pakistan, Engro Chemical, Sui Northern, Nishat Mills, Fauji Fertiliser, Adamjee Insurance and several others, which were actively traded in each session.—Muhammad Aslam.