Stocks finished an eventful week, modestly lower but demonstrated in more than one ways that it may not be that easy to pull them down despite the negative fall-out of the nuclear proliferation issue.
Investors seem to be relying on a fair return on their investment in the form of enhanced dividend, privatization programme and flotation of new issues and are not apparently deterred by nuclear developments.
President Bush's warning, for instance, to eliminate weapons of mass destruction in any part of the world did trigger panic selling as Pakistan is already in the thick of the proliferation issue after Dr. Qadeer Khan's acceptance of charges but the very next day stocks bounced back.
Strong institutional covering purchases at the fag-end of the week, therefore, allowed the market to finish fractionally down amid highly erratic movements.
The KSE 100-share index finished with a modest fall of 14.24 points at 4,874.22 after hitting the week's peak and lowest at 4,908.00 and 4,804.00 respectively and so did the capital market, finally ending around Rs1,269 billion, off Rs11 billion.
"It is not that easy to predict about the future direction of the market as it could move both ways on the strength of higher dividend news and the fall-out of the nuclear issue", analysts said.
A perfectly bullish market heading toward its new index target of 5,000 point put in the reverse gear by just a threatening warning from the US president.
"Fears that Pakistan may fit later in the US proliferation perceptions worried investors and weaker among them hastened to get out of the market after indulging in panic unloading", commented a leading broker on the developing situation of the nuclear issue.
But some others think the market will be back on rails after taking an objective view of the situation and Pakistan's stand on the issue."It was essentially a snap initial reaction to the Bush warning and investors will be back in the market after having second thought on the entire issue.
"Investors have to chose between the fallout of the nuclear issue or the basic market fundamentals during the coming sessions", analysts said adding that, "option will set the future direction of the market".
Auto shares also received a massive battering on selling after the government allowed import of old and reconditioned cars as the local assemblers refused to lower their selling prices to give relief to the people.
The selling was, however, well-absorbed at the dips on the perception that it is not that easy to beat the bulls at this stage despite the fact that the market is in a highly overbought position and the developing situation on the nuclear front. "The bull grip on the current price line is terribly strong at least for the near-term", analysts claimed.
But the dip was not without some special features as the KSE 100-share index briefly breached through the barrier of 4,900 at 4,915.00 but late selling pushed it down to finish modestly lower showing an either-way movement of 100 points.
The decline was led by energy and auto shares including the PSO, the Engro Chemical, the Al-Ghazi, the Millat Tractors, the Pak-Suzuki Motors, the Atlas Honda, the ICI Pakistan, the Sui Northern Gas, the National Bank and most of the second-liners came in for active selling at the inflated levels and fell from the recent peak levels.
But on the other hand, both the National Refinery and the Abbott Lab came in for strong support in a falling market followed by above-market dividend. While the former came out with an interim of 25 per cent, the latter announced increased final dividend plus bonus shares at 30 and 20 per cent respectively.
Cash dividend and bonus shares by Askari and Prime Banks at 20 and 10 percent bonus, 12 per cent cash and 10 per cent bonus by both respectively was also well-received and so did final cash of 40 per cent by the Gillette Pakistan.
The selling in part was also attributed to diversion of a sizable amount of funds to the Sui Southern Gas Company, which opened for public subscription today (Feb 9) and remained open for three days upto Feb 11. Ten per cent shares including five percent green shoe option or 67m shares will be sold at the fixed price of Rs26.
Some of the investors sold in part overvalued shares to raise money for the Sui Southern shares, which claimed to be a good buy at the benchmark price. It is currently being quoted around Rs34 against its face value of Rs10 and benchmark price of Rs26.
During the last couple of weeks,the market had run-up to new peak levels without any significant correction,improving all previous records both in terms of index and the market capital and needed a lot of selling being in a highly overbought position and that came in the form of profit-selling.
"After having confidently absorbing the negative fall-out of the nuclear issue, the market has the potential to sustain its current upward drive in the coming sessions also", analysts believed and added that "positive news from the economic front, higher corporate earnings and steady inflow of foreign buying could keep it in a good shape in future too".
But some others fear a loud whispering about the opposition's anti-government drive could take a big toll of a highly overbought market if it really attracts crowed on the nuclear issue in the proposed meetings.
Minus signs dominated the list, major losers being the Javed Omer, the Millat Tractors and the Parke-Davis, followed by auto shares in the backdrop of snap sell-off after the government allowed import of old and reconditioned cars to provide price relief to the consumers. The Pak-Suzuki Motors, the Indus Motors, the Dewan Motors, the Atlas Honda and the Al-Ghazi Tractors were leading among them.
The PSO, the Shell Pakistan, the Sui Northern Gas, the Siemens Pakistan, the Javed Omer, the Pakistan Oilfields, the Pakistan Refinery and several others staged late rallies.
Other gainers were led by the Mehmood Textiles, the Shafiq Textiles, the Kohat Cement, Mitchlle's Farms, the Packages, the Dewan Textiles, the Nestle MilkPak, the Siemens Pakistan, the Unilever Pakistan and several others.
Forward Counter: Speculative issues on the forward counter showed mixed trend, although managed to finish well above the early lows under the lead of the PSO, the PTCL, the Hub-Power, the OGDC and some others.