How the market would react to the scheduled arrival of Sharif brothers on Sept 10, is the latest spanner in the already tense political situation. Some say political scene will heat up. Some others are of the opinion that the reported Musharraf-Benazir deal could run into snag after their arrival and there could be an upheaval on the political front.
However, after three weeks of persistent pruning on active profit-selling, stocks last week were back on the rails as investors covered positions at the attractively lower levels amid market talk of revival of foreign buying in leading bank and oil shares.
But what seemed to have accelerated the pace of recovery was the positive developments on the political front, notably talk of Musharraf-Benazir power sharing and president’s nod to doff uniform.
The market’s bullish mood was also well-reflected in the KSE 100-share index, which recovered well over 160.89 points at 12,214.26 points as compared to 12,053.37 a week earlier as leading base shares virtually raced towards their pre-reaction levels under the lead of MCB, National Bank, OGDC, Pakistan Petroleum and Pakistan Oilfields.
The perception that power sharing deal between President Musharraf and Benazir Bhutto will end the protracted political uncertainty much needed by the share market was said to be chief motivating factor behind the current sustained rebound at the attractively lower levels.
“The return of foreign investors followed by positive report by Morgan Stanley analyst about the growth potential in the banking sector followed by revival of foreign support in MCB further supported the market run-up”, said a broker.
The change in the market cycle from bearish to bullish was so snap that many leading analysts were not inclined to buy the idea amid prevailing political polarization, but it reinforced the perception that a rebound was long over due, he added.
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The opening was, however, pretty promising on active follow-up support in some of the leading cement and other shares as the index earlier hit the week’s high. The mid-week witnessed the return of the bull to the market followed by price flare-up on the blue chip counters under the lead of MCB.
Analysts said changing political scenario amid talk of national reconciliation, talks among the contenders of power to strike a power sharing deal followed by official threat did not allow investors to take long positions on any of the counters and everyone played safe and for good reasons too. “In the prevailing political mess, the absence of foreign investors as an active market players is manifested in the low daily volumes”, they said adding “until the presidential election possibly by the middle of the next month, investors will just mark time and may not take long positions on any of the counters”.
But Ahsan Mehanti, a leading stock analyst, said there was possibility of a snap turnaround as many may not resist the temptation to cover positions at the current lower levels.
“The National Bank at Rs.225, MCB at around 270 and OGDC at 105 are a good buy and ensure handsome capital gains for those who have the courage to take risks”, he said.
Analyst Ashraf Zakaria said there was no immediate positive sign about the end of the prevailing political uncertainty and investors would think twice before going for a “big kill” at this stage.
The return of Sharif brothers from London allowed by the apex court could further heat up political undercurrent and its wake may leave behind more uncertain share market outlook, he added.
MCB, National Bank, OGDC, Pakistan Oilfields, Pakistan Petroleum and cement shares, notably Lucky Cement and D. G. Khan Cement and some lower-priced bank shares Bank Alfalah and Askari Bank are expected to lead the market advance aided by peace on the political front, some others said.
FORWARD COUNTER: Leading shares on the cleared list also followed the lead of their counterparts in the ready section and generally finished higher, major gainers among them being MCB, National Bank, Lucky Cement, Bank Alfalah and some others. But OGDC and some others fell from their early highs. —Muhammad Aslam