IT WAS a week of low volumes on the Karachi Stock Exchange last week, as the leading investors as well as the institutional traders remained absent, leaving the market at the mercy of the jobbers and the day traders.
Unlike previous weeks, the market lacked special features both in terms of big gains and massive volumes. The week also witnessed the second lowest single-session turnover figure at 17 million shares, close to the lowest so far at 15 million shares touched September last after the introduction of the T plus 3 trading system.
The KSE 100-share index moved within a narrow groove of nine points, touching the highest at 1,788 and the lowest at 1,779 points as the leading base shares, including the PTCL and the Hub-Power known for their large daily volumes, failed to lure the investors back into the market, even at lower levels.
Corporate announcements came on the board, and those expected during this month are in line with the investors’ perception, but it failed to evoke large dividend-related buying, owing perhaps to the prevailing sluggishness.
Analysts attribute many reasons to the current dullness — ranging from the election uncertainties to the absence of leading bulls — but it is the prevailing row between the SECP and the stock exchange high-ups, over certain rules, which seems to have taken the steam out of the market.
“The SECP is bent upon enforcing the rules currently adhered to, by the developed markets”, a leading stock analyst says, but the question is: Have Pakistani markets attained the sophistication which the Western markets had”? Pakistani markets need another 50 years to come to their standards!
It appears to be an undeclared battle of wits between the two equally strong contenders, and who will win is not clear, but by that time the market might receive a big jolt both in terms of credibility and price erosions, he says.
The entire activity, therefore, appeared to be a jobbing affair as no one was inclined to have a bigger stake on any of the counters as was reflected by mostly fractional price changes and low individual turnovers.
The interesting feature was the dividend-related buying in some of the pivotals, — including 30 per cent second interim dividend by the Fauji Fertiliser, 20 per cent interim by the Engro Chemical, and a final 55 per cent by the Sitara Chemical, and 40 per cent by the Security Papers, all of which failed in generating fresh buying owing to late selling. The market is performing in an atmosphere of uncertainty caused apparently by the fears about the general elections to be held amid a terrible political polarization, and fears of a showdown bid. However, the chief reason behind the dullness continues to be slack demand, most dealers believe.
Floor brokers said there are reasons to believe that the protracted bearish spell, and the sluggishness appears beyond the market’s technical demand and mandate, but the cash-heavy institutional traders are watching the situation and appear in no mood to reverse the trend.
“Staying out of the arena for such a long period demonstrate that big ones are out to browbeat the immediate contenders of power”, says a leading stock analyst, “but what about the small investors”.
Except in the war-like conditions, the market has never been so sluggish and cheerless as it has been since the beginning of the new fiscal and the extended bearish spell worries everyone.
“I fear the market has been terribly politicized by the moneyed people having strong links with major political parties”, he fears. “In similar conditions as the prevailing financial institutions play their assigned role to support the market”.
But some others say the current reported tussle between the stock exchanges and their apex body, on some procedural matters, has driven the investors out of the market, or perhaps they prefer to keep to the sidelines awaiting some favourable decision.
Much worried ought to be the brokerage houses as low volumes signal a sharp decline in their daily margins, they say.
“The continued absence of the notorious big ones for weeks together speaks of planned move”, says a leading analyst “the apex body must find the reasons behind the captive market, a virtual hostage to the whims of a few”.
Prominent gainers were led by the Security Papers, Dawood Hercules, Mehmood Textiles, Fauji Fertiliser after the announcement of second interim at the rate of 30 per cent, Lever Brothers, Bannu Woollen, Island Textiles, Noon Sugar, Clariant Pakistan, the BOC Pakistan, International Industries and several others.
Losers were led by the Bhanero Textiles, Shafiq Textiles, Shell Gas, Colgate Pakistan, Pak Reinsurance, Spencers Pakistan, Wyeth Pakistan Tri-Pack Films, and the Shell Pakistan.
Trading volume fell to 163 million shares from the previous 291 million as the volume leaders failed to make bigger showing in the absence of strong demand from any quarter.
The PTCL, the Hub-Power, the PSO, the ICI Pakistan, Southern Electric, Dewan Salman, Sui Northern, Engro Chemical, the MCB, National Bank, the KESC, Pak PTA, Chakwal Cement and the ICP SEMF and some others led the list of most actives.
FORWARD COUNTER: Speculative issues on cleared list also followed the lead of their counterparts in the ready section and the on-balance finished lower under the lead of the PSO and the Engro Chemical, which fell sharply. The latter on selling after the announcement of below market interim dividend of 20 per cent.—Muhammad Aslam