REPORTS of a massive floating stock of about 9 billion shares did not allow the market to follow a set pattern of trading last week, and it ended partially shaded amid highly erratic price movements.
After breaching through the support level of 1850 at 1,847 points, the KSE 100-share index finished at 1,850.18 as compared to previous week’s 1,868.12 points, off 17.94 points. At one stage it touched the week’s peak at 1,870.
The market capitalization followed the index, rising and falling with it and closed off Rs3.50 billion at Rs428.617 billion.
“The market appears to be a victim of the floating stock of about 8 to 9 billion shares”, a leading stock analyst Faisal Abbas at the Ali Husain Rajabali Securities claims, adding, “what is more disturbing is that it is in the hands of weakholders”.
Till it is absorbed fully, both by the financial institutions and the leading investors, the market would remain volatile, he says.
Stocks, therefore, failed to make any headway despite attempted bull rallies as fears of political fallout of the proposed presidential referendum, to give another five-year term to President Pervez Musharraf did not allow the investors to hold long positions but rather prompted selling on certain counters.
The early market reaction to referendum reports was positive but later, thinking on its political implications as most major parties are opposing it, created a good bit of uncertainty among them amid fears of agitation and law and order situation.
“I don’t call it the return of the prodigal son to take his share of booty from the pre-presidential referendum price flare-up”, said a leading floor broker, “but a section of investors is certainly in the market to buy at the dips followed by predictions of a positive outcome of the proposed referendum”.
But a member of the KSE believes the rebound was technically-inspired, although some investors believe there could be price flare-up in the sessions preceding the referendum.
“It appears to be the PSO’s day”, Salman Ahmed at the Al-Mal Securities commenting on the market’s snap rebound says”. Investors seem to be crazy to have it at any rate amid talk of a possible increase in the selling prices of the POL for the fortnight ending April 15”.
The PSO share itself rose sharply higher after breaching through the circuit-breaker but a good number of buying offers still remained unsatisfied. Other energy shares also rose under the lead of Shell Pakistan for identical reasons.
However, as petroleum prices were maintained at the previous levels, the same set of speculators who have made extensive buying indulged in panic-selling, clipping the earlier gains.
Adamjee Insurance management fought back to thwart any hostile takeover bid after making extensive buying. In the process, it share value rose sharply as the KSE high-ups had to apply circuit breaker to forestall speculative increase in its share value.
According to market sources, the MCB chairman has already purchased about 40 per cent of its floating stock and intends to have a say in the management of Pakistan’s leading insurance company.The abortive hostile-takeover have also been made in the past, but its management maintained a firm control on the affair. However, this time it has sought a court intervention to restrain the MCB chief for making further purchases from the open market.
“The presence of strong support around 1,850.00 index level, which ensures high yields and handsome capital gains was one of the reasons behind the sudden return of bulls”, stock analyst Mustafa Iqbal at Moosani Securities say adding but “beyond 1,870 speculative support turned a bit shy at least for the near-term”.
Stock analysts at the W.E. Financials believe the market is still in a consolidation area and once it meets the technical demands its next chart point could be well above 1,900-point index level.
“The inflow of strong foreign buying may not be a market factor, but the perception of a robust economy could lure it in a big way in the months to come”, they say adding “the persistent rise in forex reserves to around $6 billion could well be an attractive bait for any prospective foreign investor”.
The same long-term bullish view is also held by other stock analysts, despite fears being expressed by some of them about the proposed presidential referendum and its political implications.
Leading textile shares, and the low-priced one on other counters, notably the PTA and the FFC-Jordan Fertiliser also attracted good support and were actively traded throughout the week. A market talk of a big package for the FFC-Jordan Fertiliser to bail it out from the prevailing financial strains and accumulated losses of over Rs3 billion generated a lot of covering purchases in it at the fag-end of the week.
Prominent gainers were led by the 8th ICP, the IGI Insurance, Bata Pakistan, Adamjee Insurance and the PSO, which posted good gains followed by the ICI SEMMF, the Crescent Star Insurance, the Bestway Cement, Kohat Cement, the Shell Pakistan, Pakistan Tobacco, Pakistan Gum Chemicals, Transpak Corporation and several others. Losses on the other hand were mostly fractional barring the National Refinery, Kohat Cement, Nestle MilkPak and the Siemens Pakistan, which suffered fall ranging from Rs1.20 to 5. But the largest fall being in Wyeth Pakistan and Fateh Textiles and some others.
Trading volume rose to 867 million shares from the previous 667 million shares, thanks to alternate bouts of buying and selling in the PTCL, the Hub-Power and the FFC-Jordan Fertiliser, which accounted for 70 per cent of the total.
Other actives included the Bank of Punjab, Sui Northern, Dewan Salman, the ICI Pakistan, Pakistan PTA, Engro Chemical, the PSO, the National Bank, Ibrahim Fibre, the ICP SEMF, Adamjee Insurance, Fauji Fertiliser and several others.—Muhammad Aslam