The stocks recovered to finish well above their early lows during last week. However, buying support lacked the aggressiveness associated with a bull market despite higher-than-the-expected announcements of dividend and of bonus-share made by some leading banks and companies. Perhaps, the positive news which poured in at the fag-end of the week may change investor-perception about the future market outlook for near-term.
Reports that the India's Reliance Group has offered to set up a $500m naptha cracker unit, as a joint venture here, were well-received. This was reflected by a sharp increase in the shares of Pakistan and Attock refineries, which along with the National Refinery could be the chief beneficiaries - if the project goes through under the cover of the current peace moves.
Pakistan has been on the lookout for the project but could not line-up foreign funds or willing joint venture partner, although some Gulf investors had shown interest.
Dividend-driven rally manifested itself in a bigger way but the highly volatile price movements reflected that the financial institutions played on both sides of the market.
After an early massive decline of 112 points, the index progressively rose - on the return of a bull market- but failed to wipe the initial losses out. It ended lower by 28.45 points at 4,840.37 points after early falling to a recent low of 4,756 points. The market capital on the other hand recovered most of the initial losses and ended around Rs1,263.00 billion.
The mid-week strong rally aided by higher dividend and bonus share announcements by the banking and other sectors, notably the PTCL which showed an increase of 34 per cent or Rs13 billion in interim profit brought the investors' back into the market and the consequent active short-covering at lower levels.
But the opening was not that encouraging as some negative news followed by panic-selling triggered by the unfounded rumours drove the retailers and genuine investors out of the market as their holding capacity was, too, week to follow the highly erratic price movements.
In similar market conditions as the prevailing one, small investors and retailers generally keep to the sidelines as they could hardly be active trading partners in the grim fight between the bulls and the bears. Their loss sustaining capacity is too limited to enter the arena.
On an average, the KSE 100-share index daily fluctuated either-way by 70 points as the contenders tried to tilt the price balance in their respective favour and in the process big fall and rise. In the absence of retailers, despite carryover rates remaining in a single digit, the traded volumes remained light in each session.
The index level of 5,000 points appears to be the bone of contention between the bulls and the bears. While, the former is out to push to this level before taking a technical pause, the latter think the level is not sustainable at least for the near-term.
"It appears to be no-win situation for the a brief period", one broker predicted, adding, "but if investors chose to go by the dividend announcements and the consequent capital gains bulls may have an upper hand".
Higher dividend and bonus shares declared by most of the leading banks in the private sector - about 20 per cent cash and 10 to 20 per cent bonus shares - and notably from the energy and cement sector also allowed the market to finish partially recovered from the earlier lows.
Although, the larger fall in shares was averted despite early sell-off, the rally remained inconclusive as the losing shares maintained a modest edge over the advancing ones. The index managed to finish higher on the strength of leading base shares.
Bulk of the short-covering remained confined to leading base shares, notably the OGDC, the PTCL, the Hub Power, the PSO and the Shell Pakistan on active short-covering at the overnight lower levels.
Reports from the privatization front, notably in regard to the sell-off of the state-owned units, including the Pakistan Petroleum and some others during the coming months was another supporting factor behind the resumption of a bull market.
The opening, however, was a bit bearish what the dealers called an extension of the overnight sell-off but in the mid-session an avalanche of buying orders put the market back on road. The index earlier was down by 54 points but luckily did not fell below the barrier of 4,700 points.
"Bears have been on the look-out for some negative news to correct the prevailing statistical imbalance in an highly overbought market" analysts said and lower-than-the-expected corporate announcements by some leading energy companies gave them the chance to strike back".
But the bear-honeymoon with the negative forces proved short-lived as the bulls, relying on positive fundamentals have the reasons not be outwitted at this stage, they said. Most analysts predict the market may not fall back from the current levels after touching the high mark of 5,000-point index level". It has confidently absorbed the negative fallout of the nuclear issue - no other bigger depressant could halt its upward drive".
Positive news from the cement cartel about an increase in production quota after reports of its break up also generated a lot of buying in cement shares at lower levels and so did most of the energy scrips which had received massive battering a day earlier owing to below-the-market interim dividend of 10 per cent by the Attock Refinery.
Prominent gainers were the Millat Tractors, the Atlas Battery followed by Javed Omer, the Clover Pakistan, the PSO, the Shell Pakistan, the Sitara Chemical, the Arif Habib Securities, the Kohat and the D.G.Khan Cement.
Losers were led by the Security Papers, the Aventis, the Parke-Davis, the Clover Pakistan, and the IGI Insurance, off Rs5 to 12.50, while the Jahangir Siddiqui Bank, the Sapphire Fibre, the Dream world, the Pakistan Oilfields, the Pakistan Refinery and Dawood Hercules were marked down and so were the Gatron Industries and the Nestle MilkPak.
FORWARD COUNTER: Speculative issues on the forward counters recovered from initial lows under the lead of the PSO, which rose by Rs2.15 followed by the PTCL, the FF Bin Qasim.
The Hub Power, however, remained under pressure owing to the pre-dividend profit-selling and finished lower. The Fauji Fertiliser, the Engro Chemical and some others also rose.