THE MID-WEEK burst of active short-covering in most of the pivotals put the market back on rails last week, as the anticipatory buying triggered by the expectations of higher dividend by some of the leading companies did not allow bulls to leave the arena.
However, heavy selling in energy shares at the fag-end of the week was caused partly by below the market-expectation dividend by the Attock Refinery and the Pakistan Oilfields at 30 and 80 per cent, respectively, and partly to a modest hike in the selling price of petroleum products.
The total market capitalization — though could not match its previous peak of Rs463 billion — recovered Rs4.559 billion and was last quoted at Rs458.659 billion, indicating it is heading to surpass the two-year higher figure possibly by next week. The KSE 100-share index also recovered 36.42 points at 1,981.08 points but failed to breach the barrier of 2,000 points.
The recovery was, however, robust owing to a judicious blend of both the institutional and the general buying, which allowed most of the pivotals to finish with smart gains. Investors built-up long positions at the initial dips, as no one among them was inclined to miss the rising market.
The general perception is that the pre-election market could witness a lot of activity backed by steady inflow of foreign aid, notably the week’s $1.2 billion deal with the Asian Development Bank under the ‘poverty reduction plan’ and the reported $1bn debt waiver by the US. And added to it were expectations of some higher corporate announcements from leading companies, including few MNCs.
After several months, the broader market performed well under the lead of energy shares, notably oil refiners allowing most of the blue chips on other counters to finish with fresh good gains.
The market witnessed pitched battles between the bulls and the bears to push the index level to suit their future line of action, but in the final analysis the former had an upper hand.
The big question being debated is “whether or not the index would stay above the 2,000-point level before the national elections next month”, says a leading broker commenting on its volatile performance”.
After having lost 54 points or about 3.25 per cent in the early week sell-off, it has provided the level playing field for both bulls and bears to assess their relative corporate strengths, allowing the market to find its realistic trading ground.
None, even the weaker links among the analysts points to a bear market and there is a loud whispering to buy at current levels, notably in the energy, cement, chemical, insurance, paper and auto shares.
After earlier touching the weeks’s level of 1,939 points, the KSE 100-share index finished sharply higher close to the psychological barrier of 2,000 points, reflecting the strength of the leading base shares, notably the PTCL and the Hub-Power.
Earlier, the index moved both ways as bulls and bears were locked in a battle of wits to tilt the balance in their respective favours, but it remained a no-win situation till the close.
The highly erratic performance of the PSO followed by the conflicting reports about its privatization remained the main debating point among the speculative forces causing alternate bouts of buying and selling in it, and destabilizing the market trend.
As the Hub-Power is being traded spot owing to the proximity of its board meeting and book closure, the PSO along with the PTCL being most liquid shares have assumed the role of trend setters for the last couple of sessions.
“Active mid-week sell-off in the PSO for not any bearish reason halted the market’s sustained upward drive”, brokers said “we don’t think bears could outwit bulls in the developing scenario”.
Refinery shares on the other hand came in for renewed strong support under the lead of National, Pakistan and Attock refineries followed by active short-covering ahead of the dividend announcements.
Stock analysts said it now appears pretty difficult to predict about the direction of the market as due to the inconsistency in financial support, general investors are not inclined to take long positions even on blue chip counters.
“Dividend related selective rally could emerge any day but whether or not it could sustain is unclear at this stage”, they added.
Among the top gainers, Pakistan Refinery, Shafiq Textiles, Rafhan Maize, Attock Refinery and Wyeth Pakistan were leading followed by the Orix Leasing, Bank Al-Habib, Mari Gas, Artistic Denim, Pakistan Refinery, HinoPak Motors, Cherat Papers, Packages and the Transpak Corporation.
Losers were led by the Al-Ghazi Tractors, the Siemens Pakistan, the Millat Tractors, the Unilever Pakistan and the Pakistan Oilfields, followed by the Askari Leasing, the Engro Chemical, the Murree Brewery, the Al-Ghazi Tractors and some others.
Trading volume shrank further to 452 million shares from the previous 512 million as the Hub-Power was being quoted spot and also due to the absence of leading dealers.
The PTCL, the PSO, the MCB, the Engro Chemical, Dewan Salman, the National Bank, the ICI Pakistan, the Hub-Power, the Sui Northern Gas, the FFC-Jordan Fertiliser, the D.G.Khan Cement, Fauji Fertiliser and the Chakwal Cement were among the most active, which daily came in for active bouts of buying and selling.
FORWARD COUNTER: Leading speculative issues also followed the trend of their counterparts in the ready section but the on-balance closing was on the higher side, barring the PSO, which moved both ways followed by the conflicting reports of its sell-off.
The Engro Chemical, the PTCL, the Hub-Power and the MCB managed to finish on the higher side thanks to active short-covering at lower levels and a good bit of speculative activity.—Muhammad Aslam