A snap weekend rally allowed the stock market to recover some of the initial losses but its future direction will largely depend on some positive announcement by the prime minister at the KSE award giving ceremony to top 25 companies.
Opinions are divided about the market's future outlook as fears from the carryover market owing to a massive float in waiting there could halt any technical or speculative rally at least for the near-term. But some others claim the fresh float from the badla market could be orderly as no one is inclined to push the market further lower.
Earlier, stocks failed to sustain their upward drive during the preceding week as higher investment of Rs28 billion on the carryover market worked as a hanging sword on the head of investors all the time and terribly restricted their manoeuvring leverage.
The KSE 100-share index recovered to finish higher by 20 points at 5,576.00, reflecting the strength of leading base shares. Market capital after mid-week fall rose to close higher by Rs4 billion at Rs1,552 billion as compared to 1,548.00 billion a week earlier. But a modest rally at the weekend session aided by expectations of some positive announcement from the prime minister at the KSE award giving ceremony enabled the market to wipe out initial losses but how it would behave during the next week is unclear.
Although larger fall was averted as bulls and bears maintained a near-status quo apparently anticipating the year-end moping operations by the financial institutions, falling daily volume worried investors amid fears that fresh float from the carryover market could mean any thing to the market. But luckily, punters held on their positions.
Textile shares remained in the limelight amid predictions of higher dividend and bonus shares for the year ended Sept 30, 2004 as some of them had already announced above market expectations dividend. But on the other hand energy and cement shares, the two trend-setters remained under profit-selling and weighed heavily against the underlying sentiment.
After breaching through the coveted level of 5,600 points, the KSE 100-share index finally finished modestly lower as leading base shares, notably OGDC, PTCL, PPL, PSO and some others remained under pressure.
Market talk that the management of Bosicor Pakistan, an oil refinery in the private sector, plans to bid for the National Refinery evoked good interest in its share followed by some other low-priced ones, notably Japan Power, which also seems to be in some sort of tie-up with it.
Both leading investors and bargain-hunters stayed on the sidelines apparently having an overview of the recent political developments including signing of the dual-office bill by the acting president.
Apart from selling in the leading energy shares followed by official decision to keep petroleum prices unchanged at the retailers' end for the 14 consecutive fortnights, the other moot point was the signing of dual-office bill by the acting president, enabling President Musharraf to hold simultaneously the post of president and the army chief.
"The MMA, an alliance of religious parties, along with the ARD has already kicked off an anti-uniform drive at a public meeting in Karachi held last Sunday and vows to force the president to honour his promise of holding one post by Dec 31", analysts said.
"What worries investors on long-term basis are fears of negative fallout of the political agitations against the dual office bill and its impact on future stock trading", they said. But some others said much will depend on the intensity of the anti-uniform drive followed by a possible political turmoil. But if the agitation turns into violence as is widely speculated, it could well be a bad omen for the market, they added.
"The religious parties are in a position to demonstrate their massive street power backed by a committed workforce", says a leading broker adding "but the current political reconciliation moves initiated by the government, notably release of Asif Zardari could neutralize the negative fallout of the political polarization".
On the technical front, a record investment and volume on the badla market appears to be chief worry for investors who fear fresh float from there could work against the underlying sentiment in the coming sessions.
The interesting feature is that investors are taking big stake in the low-priced textile shares amid market talk of higher earnings owing to cheaper lint prices and steady exports. Already, some of them have announced higher dividend including bonus shares.
The market is, therefore, in the consolidation phase and could move either-way depending on the background news, notably from the political front. Unlike the previous week, broader market performed well as most of the second-liners managed to finish with extended gains notably among them being Ahmed Hassan Textiles, Sapphire Textiles, Bhanero Textiles, Mitchell's Farm Fruits, Security Papers, HinoPak Motors and Artistic Denim.
But the leading gainers were led by Nestle MilkPak, HinoPak Motors, Colgate Pakistan, Aventis and some others including Gatron on active support. Losers were led by overvalued shares such as Dawood Hercules, Grays of Cambridge, Zulfiqar Industries, Siemens Pakistan, Shell Pakistan, EFU Life and Treet Corporation, which suffered fall followed by Wyeth Pakistan, Shezan International and Sitara Chemicals.
FORWARD COUNTER: Speculative issues on the forward counter turn mixed barring Askari Bank, Fauji Fertilizer Bin Qasim and some others, which managed to finish higher, leading shares including PPL, OGDC, PTCL ended lower on active mid-week profit-selling.