KARACHI, June 24: Stocks on Monday lacked normal trading interest as both leading investors and institutional traders adhered to the sidelines amid renewed fears of war with India followed by threatening postures of top leaders of Pakistan and India.
Trading was sluggish as heating up of the border tension worried investors reinforcing their perceptions of a fragile peace followed by rigid positions taken by the contenders.
The sudden change in the positions taken by Pakistan and India on the border situation including withdrawal of troops and cross-border infiltrations has intensified investor fear about a possible war, dealers said.
The KSE 100-share index suffered a fresh setback of 11.43 points at 1,767.87 as compared to 1,779.30 at the last weekend as all the leading base shares ended lower under the lead of PSO and Hub-Power.
However, the fractional decline in the index reflects that investors are watching the border situation carefully and may react to the post-budget economic scenario when fears of war are removed.
“After two weeks of relative calm in the backdrop of visit of the US defence secretary, fears of war again gripped the market,” observes a stock analyst. “The post-budget rally, which was shaping well on selected counters faltered half way.”
India’s refusal to withdraw troops from the borders and Pakistan president’s warning against crossing of the LoC or making it permanent border did work against the underlying sentiment.
“The ball is now in the court of institutional traders as leading brokerage houses and general investors are awaiting their re-entry into the market to add respectability to stock trading,” says an analyst commenting on the prevailing sluggishness.
But some other analysts claim the market is not weighed down by the border situation or fear of war with India, it is the victim of some technical mechanism related to new carry over transactions and badla rates.
Reports that the Securities and Exchange Commission of Pakistan is revising the badla business rules to curb speculative activity, while the KSE plans to raise the limits of circuit breaker in tune with the post-budget rallies were cited as one of the main reasons of the current sluggishness.
“But all are united that the rebound could be delayed, it is sure to manifest itself in a big way in the coming sessions,” predicts a prominent stock broker adding those “who have the resource and the courage are building up long positions at the prevailing rates for capital appreciation.”
Bank, energy, chemical and textile sectors could well lead the market advance being the chief beneficiaries of the budget and that is where investors are concentrating, he adds.
Most of the price changes were fractional and reflected lack of support rather than large selling from any quarter. Some of the leading shares, led the market decline, major losers among them being PSO, Shell Pakistan and Lever Brothers, falling by Rs.1.85, Rs.3 and 12.10 respectively.
Dewan Textiles, National Refinery, General Tyre, Abbott Lab, Glaxo-Wellcome Pakistan and Wyeth Pakistan were leading among the other losers, falling by one rupee to 1.30.
Pakistan Oilfields was leading among the gainers, up Rs.4.95 followed by Javed Omer, KASB & Co, Atlas Honda, Custodian Modaraba and 4th ICP Mutual Fund, off one rupee to 1.50.
Trading volume showed further contraction at 65m shares from the weekend 81m shares as losers maintained a fair lead over the gainers at 143 to 84, with 59 shares holding on to the last levels.
Hub-Power was again actively traded, easy five paisa at Rs.23.25 on 26m shares, followed by PTCL, lower 30 paisa at Rs.17.20 on 16m shares, PSO, off Rs.1.85 at Rs.139.50 on 5m shares, Nishat Mills, up 45 paisa at Rs.15.95 on 4m shares and MCB, off 60 paisa at Rs.27.40 on 2m shares.
Other actives were led by ICI Pakistan, lower 30 paisa on 1.641m shares, Engro Chemical, off 80 paisa on 1.579m shares, National Bank, lower 30 paisa on 1.370m shares and Adamjee Insurance, lower 30 paisa on 0.830m shares.
FUTURE CONTRACTS: Forward counter also followed the lead of the ready section where leading shares fell under the lead of Engro Chemical, PSO and MCB, which fell by one rupee, Rs.1.80 and 2.45 at Rs.60.85,140.00 and 25.30 respectively on modest turnover barring PSO, which accounted for 1.582m shares.
The notable feature was that trading also started in the July settlements side by side the maturing June contracts. Barring some the July contracts also fell.
Hub-Power was actively traded, lower 10 paisa at Rs.23.25 on 4.351m share and 1.460m shares in the newcomer July delivery at 23.50. PTCL was traded lower by 32 paisa at Rs.17.28 on 1.488m shares in the ruling contract.
DEFAULTER COMPANIES: The activity on this counter was dull as shares of seven companies came in for trading, without matching deals. National Modaraba, was down 10 paisa at Rs.0.60 on 2,000 shares, while Kausar Paint rose by 25 paisa at Rs.1.75 on 500 shares. Noor Silk rose by 50 paisa without any business.
DIVIDEND: Shafiq Textiles interim cash at the rate of 10 per cent, Kakakhel Pakistan interim five per cent.