Stocks resumed their upward drive as the post-Eid holiday week witnessed a major shift in investor-perception about the future market outlook, although fears of the US attack on Iraq did take its toll in the form of lower daily volumes.

Opinions, however, are still divided over the future price trend but the cash-heavy financial institutions seem to be in no mood to sit on the sidelines and resume their covering operations, notably on the low-priced shares, ensuring good capital gains. Heavy buying in the FFC-Jordan Fertiliser, the Pak PTA and the KESC were outstanding among them, which signalled a major shift in investors’ preferences.

Reports of an aircrash, killing the Pakistan Air Force chief along with 16 others briefly halted the PSO-led strong technical rally as investors and most of the weak holders hastened to get out of the market fearing the negative backlash of the incident.

But the on-balance trend remained on the higher side as the KSE 100-share index staged a robust recovery of 111 points or four per cent over the previous closing, reflecting that most of the pivotal and leading base shares are well on the road to a sustained recovery. It was last quoted at 2,528.31 points as compared to 2,418.00 a week earlier.

The market capitalization also recovered about Rs22 billion at Rs558.605 billion as the massively capitalized shares, including the PTCL, the Hub Power and the PSO finished with good gains.

The late recovery was aided by active short-covering in the PSO, the Hub Power and some other blue chips, allaying the fears of an extended bearish-spell weekend. The weekend rally also suggested that the market had digested the negative fallout of the PAF aircrash.

Although, there were conflicting views about the date of the Pakistan State Oil’s (PSO) sell-off, jointly agreed by the three short-listed bidders and the Privatization Commission for April. Investors tried to grab its floating stock for good reasons before the reports of the aircrash reached the market.

Some analysts say the disinvestment of its 51 per cent controlling shares to any of the three bidders may be further delayed as the financial issues involved in the sell-off may not be resolved by that time.

Holding market shares of 70 per cent, good dividend record, and higher after-tax earning it could well prove an envy to any prospective investor, they said. What is more important is that its ten-rupee share is ruling below Rs200, having hit its highest-ever level of over Rs400 some decades back.

Iraq war worries are there but if all goes well on the local front, the PSO could inspire a lot of fresh buying both genuine and speculative possibly by next week, but fears of an impasse about the financial matters relating to the outstanding liabilities need to be allayed.

Although, the market capitalization soared by Rs19 billion to about Rs557 billion, some leading investors fear that the bull-run could be deceptive, not fully supported by the background news excepting the market’s highly oversold position.

After having lost 540 points or 16 per cent during the last two weeks, the KSE index bounced back on heavy institutional buying in the pivotals such as the PSO, the Shell Pakistan, the Hub-Power and the PTCL, some of them having breached through circuit breakers.

The market seems to have ignored the possible negative impact of the murder of a top Muttahida Qaumi Movement’s (MQM) leader on Sunday evening, as investors apparently did not fear law and order situation.

The KSE 100-share index had fallen by 540 points from the peak level of 2,954 to 2,418 points during the pre-Eid sessions amid predictions that it could fall to 2,000-point level. The breach of the 2,500 index barrier is, however, significant in more than one ways.

The snap rally gave a pleasant surprise to most of the leading stock analysts as they were expecting the extension of pre-Eid holiday bear-run fearing a negative fall-out of the killing of the MQM leader.

It is interesting to note that the turnover figure did not match the steep increase in index as short sellers kept to the sidelines awaiting further developments on the law and order front.

“The current lower level could well be an attractive bait for any prospective investor”, brokers said, adding “why they chose to stay out is clear from their future perceptions about the stock trading”.

But the breach of the 2,500-point index level has demonstrated that bulls are back in the market and are expected to indulge in active short-covering in most of the pivotals and blue chips at the prevailing low levels, brokers said.

However, they ruled out the possibility of any major breakthrough at this stage as the external background news, notably Iraq situation may not allow bulls to go beyond the sustainable levels, they predict.

“The terribly low volume reflects that brokers spent much of the time in exchanging Eid greeting rather than indulge in large business”, analysts said.

Dividend news from the Rafhan Maize Products at 110 per cent, which made the total for last year to 340 per cent, 17 per cent by the Faysal Bank and some other also supported the market run-up.

Energy shares and blue chips on other counters led the market advance under the lead of the PSO and the Shell Pakistan, which recovered followed by Dawood Hercules, Javed Omer, Pakistan Refinery, Indus Motors, Pak-Suzuki, Engro Chemical, Cherat Papers and Unilever Pakistan, the largest rise being in Pakistan Oilfields. The Wyeth Pakistan was leading among them.

Major losers were led by the Colgate Pakistan and the Nestle MilkPak, followed by Dawood Cotton, Bannu Woollen, Shell Gas, the BOC Pakistan, Ghani Glass and Tri-Pack Films and several others.

Traded volume suffered a sharp contraction at 637 million shares owing to the absence of leading bears, bulk of which went to the credit of the Hub-Power, the PSO, the PTCL, and the Sui Northern Gas.

Some of the low-price issues, notably the FFC-Jordan Fertiliser, the Pak PTA, and the KESC also came in for active support at lower levels and rose. The Engro Chemical, the ICI Pakistan, the Pakistan Oilfields, the National Bank, the MCB and Dewan Salman were also actively traded.

FORWARD COUNTER: Speculative issues on the forward counter also recovered from early lows on active short-covering. The Hub-Power, the PTCL, the PSO, the Sui Northern Gas, the Pakistan PTA and the FFC-Jordan Fertiliser on balance ended higher.—Muhammad Aslam