Persistent foreign selling in some leading shares, mainly MCB, PTCL and OGDC, was well-absorbed by institutional traders, and this averted a major fall as it evoked local short-covering on other blue chip counters.
Other factor which pushed the market up was report of new oil and gas discovery, which not only boosted trading in oil and gas shares but also triggered sympathetic buying on other counters having potential for capital gains.
Despite a massive mid-week jolt, the market later assumed an optimistic outlook as the nation inched towards true democracy.
The election of speaker and deputy speaker in the maiden session of the newly elected assembly points to the nomination of the leader of the house possibly by next week, and transfer of power to the parliament.
After falling at one stage to week’s lowest at 14,726.54, the KSE 100-share index managed to finish partially recovered at 14,993.87, off 93.6 points, with indications that it could further rise during the next week on the strength of heavy fresh buying in the oil and cement shares followed by reports of new oil finds and higher exports of cement.
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The crash of foreign markets followed by a rebound amid fears of US recession, the Bear Sterns episode, and its subsequent sell-off, and the US discount rate cut did take its toll but local positive factors again put the market back on the rails.
However, the re-entry of foreign investors by next week could not be ruled out and that could give the needed boost to shares on selected counters and in turn to the broader market.
The opening last week was on the higher side as the market welcomed the new elected assembly as was reflected by sharp increase in the KSE 100-share index, but the initial enthusiasm could not be maintained on the perception that the new government would inherit a host of economic and financial problems, and there could be possible jolts in the coming months on the issue of monstrous inflation.
However, long-term economic perceptions are fairly bullish on the belief that the sailing would be smooth after initial challenges were met by the coalition governments both at the centre and the provinces.
Fresh active short-covering in Engro Chemical, PSO, Pakistan Oilfields and some others limited the fall in the index despite active profit-selling in Bank of Punjab, OGDC and Arif Habib Securities.
“Amid fears of a possible standoff in the transfer of power, investors mostly take calculated forward positions as heavy financial risks are entailed,” said a broker.
It is believed that the presidency and the new government could hardly co-exit owing to their rigid positions on some issues which may lead to a standoff, some analysts fear. This may keep the foreign investors away from the market who were planning a re-entry.
“There could be jolts here and there including nomination of the future prime minister, but I don’t see any major split in the ruling coalition”, said a leading stock analyst.
But investors were expected to play safe and would not indulge in speculative trading at least till a strong prime minister is in place at the centre, he added.
The weakness of the cement sector on active selling weighed heavily against the underlying sentiment as leading among them, notably Lucky Cement and D. G. Khan Cement came in for selling at higher levels.
Forward counter: Barring Bank Alfalah, Pakistan Oilfields, Engro Chemicals and PSO, which managed to finish with good gains, other speculative remained under pressure and ended lower under the lead of Bank of Punjab, MCB, Lucky Cement and some others.—Muhammad Aslam