The closing of index well above the base level of 10,000 points and that too at the weekend session indicates the recovery may be extended when trading resumes next week.
The protracted political uncertainty may be on its way out as all pointers indicate that the president may resign owing to backdoor efforts to end the impasse, some analysts say.
The market, therefore, was back on the rails as a strong weekend rally pushed the KSE 100-share index again well above its psychological barrier of 10,000 points on active fund buying in the leading bank and oil shares, but the terribly weak rupee at Rs77 to dollar worried investors.
After having fluctuated either-way earlier in the week, the KSE 100-share index finally finished with smart gain of 349.26 points at 10,258.71, adding Rs101 billion to the market capital. The KSE 30-share index, on the other hand, recovered 528.19 points at 11,690.23.
Analysts said the weekend rally is expected to be extended during the next week also owing to some fundamental changes in the background news leading to end of the protracted political uncertainty.
“The perception that the president is on his way out during the next couple of days seemed to be the inspiring factor behind the revival of strong fund buying followed by others”, analyst Tabish Hasan believes.
In an unsold market backed by higher payouts and bonus shares by most of the leading companies, mainly Shell Pakistan and PSO and some positive developments on political front again lured investor back in the market.
The market is expected to stage a grand rebound possibly by the next week on the strength of higher cash payouts and bonus shares, and any positive developments on the president’s impeachment issue could add further depth to the underlying sentiment, analyst Tabish Hasan said.
The market is ripe for a strong technical rebound aided by higher corporate announcements by some of the leading companies including PSO, Shell Pakistan, Fauji Fertiliser, BOC Pakistan, Engro Chemicals and bonus shares by some others.
No one could deny the fact that investors’ confidence in the share business has been terribly shaken over the last couple of months as the coalition government remained busy in non-issues in the market parlance and did not come to rescue it from the impasse owing to dust raised on the political front, said a leading broker.
The next week could well prove very crucial for the future outlook of the share business but the chief deciding factor will be the end of the uncertainty and return of the prospective investors back in the arena.
The KSE 100-share index earlier in the week again broke the barrier of 10,000 points up by 2.65 per cent on strong fund buying aided partly by reports that the Moody’s rating agency has maintained stable outlook for the Pakistan economy despite political turmoil and a terribly weak rupee at a record low of Rs77 to a dollar in kerb.
Although it has still to go a long way to attain its pre-reaction level of well over 15,000 points, the strong equity fund support signaled the shaky investors to buy as the market has already hit the bottom and now is the turn of a sustained bull run.
The economy may not be that strong as Moody’s think in the backdrop of whisper of another short cotton crop but it has the potential to rebound if the current political power tussle is resolved amicably, some brokers said.
“The political uncertainty is now at its peak amid fears whether or not the president will resign or stay in the arena”, said a leading stock analyst Hasnain Asghar Ali. “But the fund managers seem to have whispered in the ears of massively mauled investors to ride the bandwagon”, he added.
But thin volume of below 100 million shares as compared to above average daily 250 million shares in normal political conditions shows that a good section of investors was still in two minds and is awaiting developments on the political front.
Analyst Ahsan Mehanti said it was too early to say something about the return of foreign investors in an oversold market, and added that they would probably await the outcome of president’s impeachment before resuming local activity.
“Beyond the market speculation about the future of the president whether he will resign or not is said to be at the peak”, brokers said adding “those who stand for his safe exit appear to have an upper hand and may be the winners of the stake”.
On technical grounds also, many investors who can peep through the future never miss a highly oversold market and remain buyers, of course, having covered their future financial losses if any by hedging somewhere else.
Forward counter: Leading shares, notably OGDC, MCB, National Bank, Pakistan Petroleum, Pakistan Oilfields, PSO, and Shell Pakistan and some others managed to close on-balance firm on active short-covering in post-dividend trading. Arif Habib Securities and some others fell modestly but ended well above the week’s lows.—Muhammad Aslam.