A snap rally at the weekend changed the entire future outlook of share prices. However, leading analysts entertaining bearish ideas failed in giving specific reasons behind this turnaround.
Many still doubt that the rally could be deceptive and they may not ride the bandwagon awaiting developments when the trading resumes next week. Cement sector led the market advance on the perception of furthering exports to Dubai after Emirates lifted the ban on its import.
The most satisfying feature was the stabilization of the KSE 100-share index above 5,300 points which led to the pre-reaction levels. The end in volatility reflected that the investors were back and meant business before massive amounts tied to the PPL IPO were back into the market.
Investors covered their positions at an attractively lower level in response to higher interim corporate announcements by some leading companies. But a strong snap rally at the weekend session reflected that the current correction was overdone and the market was now well on its way to a sustained recovery.
Earlier, highly erratic price movements and either-way fluctuations of the KSE 100-share index showed that there was a fear lurking in the minds of investors about the future outlook in the backdrop of political events.
"All were playing on short-term basis, selling at rise and buying at dips in the absence of negative and positive rumours", said a leading broker commenting on the market's behaviour last week.
It confidently sustained the shock of a suicide attack on the prime minister-in-waiting, Shaukat Aziz. The consolidation forces, however, lacked courage to come to the aid of shaken investors.
The KSE 100-share index managed to sustain the mid-week rise above the psychological barrier of 5,300 points on late but active follow-up support from the financial institutions.
It finally, was quoted at 5,343.52 as compared to 5,290.00 points a week back, up by 53.60 points. The capital also fluctuated either-way but managed to end with an increase of Rs11 billion at Rs1,444 billion.
Fresh float from the carryover market did depress prices on some counters followed by active short-covering at dips the very next day, thus leading to highly erratic price movements.
The market eagerly awaited the return of about Rs18 billion back into the system in due course, as balloting for shares of the Pakistan Petroleum had already been held on August 4.
Early in the week "bears exploited the post situation of an attack on Shaukat Aziz, beyond their mandate in the absence of leading bulls. This, however, will prove short-lived affair despite reports of high alert as bulls have courage and guts to fight back in an identical situation," said a leading broker.
An idea of the prevailing confusion after trading resumes may well be had from the fact that there were more sellers than buyers and in the process price kept sliding down on all sectors - overvalued ones being in the forefront.
Textile shares led the market decline signalling apparently implications of a recently signed WTO agreement to progressively eliminate subsidies and tariffs for developing countries.
Finance Minister Shaukat Aziz nurtures special relevance to stock investors and it were his policies which rolled, by 300 per cent the KSE 100-share index in last couple of years, making many millionaire, overnight.
The index had risen to 5,620 from 2,000 points during last couple of years, thereby pushing market capital to above $25 billion. All owing to finance minister's capital market reforms.
"His removal from the Pakistan financial sector could deal a blow to bourses. Now, those who were eying the index level of 6,000 after his election as the Prime Minister may have to readjust their future targets", said a leading broker.
Though he survived the attack, but it's fallout on stocks was negative as everyone tried to get of out this long positions. The situation was further aggravated by the reports of killing of five army men in a terrorist attack in Balochistan.
"Investors were worried over deterioration in law and order, and may stay away after liquidating their long positions", analysts said adding, "bad times may be ahead if violence continued in coming weeks".
All leading shares fell in unison but there were no buyers at the falling prices as investors were more concerned about the future market outlook rather than an attractive bait of low levels.
Dividend announcements both from the Security Papers, 55 per cent cash and an interim of 20 per cent, by the Faysal Bank, the Al-Meezan Mutual Fund, cash 10 per cent bonus 15 per cent, and some others were on higher side of the expectations. It came at a time when investors were worried over negative developments on law and order front.
Other good gainers were led by the Nestle MilkPak, Atlas Honda, Millat Tractors, Al-Ghazi Tractors, Javed Omer, the ICI Pakistan, Shell Pakistan, the PSO, Lakson Tobacco, Arif Habib Securities, Honda Atlas followed by Jahangir Siddiqui Bank, Pakistan Refinery and Pak Elektron, International Industries, and many others. Losers were led by the Colgate Pakistan, Packages, Javed Omer, Aventis and the Shell Pakistan, major losers being the Wyeth Pakistan and some others.
FORWARD COUNTER: Leading shares on this counter came in for active selling under the lead of the Pakistan Petroleum and the OGDC followed by the PTCL. Others including the National Bank, the D.G.Khan Cement, Fauji Fertiliser, Engro Chemical and the PSO managed to finish modestly higher.