Stocks staged a robust recovery last week as investors led by the financial institutions made active covering purchases at lower levels on mostly blue chips counters aided by some positive developments on the political front.

Prime minister’s refusal to support the US in Security Council voting for war on Iraq may be one of the positive reasons as it reflects public sentiments, analysts said adding, “but how the US will view Pakistan’s neutral stance, or will it be able to sustain the possible pressure will be of investor-interest”. But the past record tells a different story.

After breaching through the barrier of 2,500 points, the KSE 100-share index finally ended with an extended gain of 91.59 points at 2,540.25, adding Rs18 billion to the market capitalization at Rs577 billion.

Peaceful oath taking by the opposition Senators — despite rumours of uproar — in both houses and the restoration of 1973 constitution also aided the underlying sentiment.

“The market generally fell from its peak level ahead of the long weekend as retailers seldom hold positions because of the financial risks involved during the intervening holidays”, brokers said but the “snap rally ahead of four closures gave a pleasant surprise to everyone”.

Despite weekend snap rally, fears of Iraqi war dominated the investors’ mind as America did not show signs of sanity and vowed to go alone even if Britain withdrew its support on political pressure, they said adding, these worries are well reflected in low daily volumes and investor-perception to play safe until the Security Council go for voting on the resolution in the backdrop of Russian threat of veto.

Earlier, retailers kept to sidelines fearing a big showdown between the opposition and the party in power over the LFO issue, as both have taken a rigid position on it.

Investors fear that the confrontation between the opposition and the government over some most vital legal issues could take an ugly turn any day. This did not allow normal trading despite Prime Minister’s statement that the LFO issue may be resolved through mutual talks.

After earlier falling to 2,401.52 points, the KSE 100-share index staged a snap rally later on active short-covering in some of the leading base shares under the lead of the PSO followed by some positive developments on its sell-off.

“The signs of political instability are there after the Opposition is all out to do away with the LFO”, analysts fear “anything could happen if the contenders do not opt for give and take”.

The MMA, which has staged two successful million anti-war marches in Karachi and Islamabad in 10 days is not deterred by the veiled threats from the official quarters about the end-results and intend to carry out its campaign until the government amends or withdraws the LFO.

Good news of a record rise in the forex reserves to $10 billion ahead of the target period, surplus floating liquidity because of lower banks’ mark-up and increase in industrial productivity should have generated a lot of fresh covering purchases but investors generally decided to play safe.

A long weekend ahead as the stock market closed on March 12 on account of Ashura and would reopen on 17 did not work against sentiments as investors covered their unsold positions adding to their portfolios at the falling prices.

“The looming clouds of war on Iraq is also one of the major depressants as investors would not like to hold long until the world opinion against the war deters the US to follow the UN advice”, analysts said.

A considerable decline in the daily turnover figures are reflective of the current market concerns amid fears that the Gulf war may change the future economic outlook, notably for the weaker and developing economies the world over.

“No need to become speculative trader at this crucial time”, one broker cautions his clients. “The current lower levels certainly provides an attractive bait for any prospective investor but the risk involves are much higher”.

Leading gainers were led by the Shell Pakistan, the New Jubilee Insurance, Sana Industries, the Unilever Pakistan, the PSO, the Pakistan Oilfields, followed by the Tata Textiles, Dreamworld, Pakistan Telephone, Habib Insurance, the ICP SEMF and the Pakistan Refinery and several others.

Losers included the 4th ICP Mutual Fund, Javed Omer Vohra, Dawood Hercules, Lakson Tobacco, Javed Omer, the BOC Pakistan, Engro Chemical, Orix Leasing and Pakistan Reinsurance Company, Wyeth Pakistan, Bhanero Textiles, Nestle MilkPak and many others.

Owing to holiday shortened week, trading volume fell to 366m shares bulk of which went to the credit of Hub-Power, the PTCL followed by the PSO, the Sui Northern Gas, the FFC-Jordan fertiliser, the MCB, Bosicor, Pakistan National Bank and the ICP SEMF.

Other actives were led by the Engro Chemical, the ICI Pakistan, the Pak PTA, Dewan Salman, Pakistan Oilfileds, Fauji Fertiliser and several others.

FORWARD COUNTER: The Hub-Power and the PSO encountered alternate bouts of buying and selling but finally managed to finish higher on active short-covering at the lower levels.