It appears to be an anticipatory buying on the perception that the presidential candidate of the ruling elite is sure to win the election because of its numerical strength, analysts said.
The market is expected to be at its own as the KSE is also mulling to lift the price freeze by next week allowing investors a free hand to operate according to their own whims and perceptions in a highly oversold market.
Earlier in the week, chained by the price freeze and floor on the KSE 100-share index, stocks passed through one of the dullest weeks in its trading history as investors played on both sides of the fence indulging mostly in jobbing rather than taking long positions.
Some analysts said the market was saved from a big shakeout by the price freeze followed by reports of Nato forces attack inside Pakistan, killing 20 persons. Though it was a matter of concern for all but did not affect the market.
Everyone was waiting the unlocking of the price freeze possibly by the next week after the presidential election but opinions are divided about the future direction of the market in the highly polarised post-presidential election political scenario.
The KSE 100-share index showed sharp rise of 143.93 points at 9,342.19 as some of the leading base shares managed to finish with modest gains barring MCB, Engro Chemical, Shell Pakistan and PSO. Its junior partners, the KSE 30-share and KMI-30 shares index also rose by 43.20 and 52.87 points at 10,241.25 and 11,421.34 points respectively.
Thursday’s fractional rise of 0.11 points in the index, which created history in the backdrop of an all-time single-session increase of 690.60 points in it on June 24, 2008, reflects that all was not well with the country’s top bourse. A leading stock analyst Hasnain Asghar Ali, however, hears a “roar of bulls not in a distant future but is marching right now towards the arena attracted apparently by the market’s highly oversold position, higher payouts and an end of the uncertainty after the presidential election”.
But will the terribly weak rupee, falling forex reserves, weak economic indicators and badly shaken investor confidence in the share business allow the return of the bulls is anybody’s guess at this stage, some others said.
The Moody’s rating agency is alert to give its rating version on the Pakistan economy shortly, which in any case may not be positive, they added.
“There is strong rumour that a massive foreign float of $2.5 billion is awaiting the lifting of the current price freeze and may find its way into the market further intensifying the current sell-off”, said a leading analyst adding “so hurry and sell if you can”.
An idea of the prevailing sluggishness may well be had from the fact that even a record bonus shares at the rate of 500 per cent by the National Foods failed to generate fresh buying in its own share.
“Why leading investors and fund managers are so shy to give the needed lead to the prospective investors?”, asks leading analyst Hasnain Asghar Ali and adds “there is no limit on the upper lock as a particular share could be pushed as higher as 10 percent”.
All the leading shares including National Bank, MCB, Pakistan Petroleum, Pakistan Oilfields, OGDC, Arif Habib Securities and many others are now in the firing range, ensuring massive capital gains, he said adding “what is needed is the conviction to take a risk not that big at the current levels as leading shares, notably MCB, a Rs400 plus share is available at Rs238” and National Bank at a half price of its stable level of Rs200”.
The chained market may not have many options to meet its daily technical demand as massively mauled investors will play safe until the presidential elections on Sept 6, some floor brokers said adding the conflicting reports about some “big changes in the list of contesting candidates just before the deadline kept them guessing and could decide how to react”.
“Though a bit late investors seemed to have started to feel the pinch of price freeze on the Aug 27 level”, said analyst Tabish Hasan adding “there are now a loud whispering against the freeze and a call for a strong unfreeze”.
A sharp decline in the daily turnover figure, lack of general support and the absence of leading investors signal that sluggishness will continue in the absence of strong fund buying, he added.
Forward counter: Owing to late week reversal in the trading pattern ahead of presidential elections, leading shares came in for active support and finished partly recovered under the lead of MCB, Pakistan Petroleum, Engro Chemical, Bank Alfalah, Pakistan Petroleum, PSO, Shell Pakistan and many others.
—Muhammad Aslam