KARACHI, March 18: Stocks on Tuesday bounced back from the overnight lows followed by active short-covering in most of the pivotals but analysts fear the snap rally could be deceptive in the backdrop of President Bush’s deadline to president Saddam Hussain to leave Iraq within the next 48 hours. The KSE index recovered 39.89 points at 2,525.78.
Although the way for a possible US attack on Iraq was clear but the Iraqi president appeared to be in no mood to oblige Bush as the ground realities told a different story, they said adding “to follow the surging world markets on the perception of a short and a quick war may have no relevance to the local conditions.”
Apart from a violent local reaction to the US attack, the economic worries may not allow investors to trade in stocks rather they will seek new “safe havens” to make up for the possible financial war losses.
The KSE 100-share index recovered 39.89 points at 2,525.78 as compared to 2,485.89 a day earlier, reflecting the strength of the PTCL, PSO and Hub-Power.
“Meet the deadline of 48 hours and leave Iraq or face the US invasion,” president Bush’s ultimatum to President Saddam Hussain has cleared the uncertainty over the Iraq situation as it could lead to US attack possibly by the tomorrow evening brokers said.
What seems to have encouraged investors to cover positions at the lower levels was the bait of capital gains despite financial risks.
President Bush’s deadline should have created panic among the investors amid fears that the war may now not be that far but instead they opted for covering purchases at the overnight lows on the perception that the war may be “short and quick and it is right time to be back on the market.”
“The snap rally could be highly deceptive as it is not warranted by any of the positive fundamentals,” says an analyst. “In war-like situations as the prevailing ones investors watch the course of events before riding the bandwagon.”
“There is a loud whispering in the market that some long parties are trapped in the whirlpool of speculative trading and trying to push prices higher in a bid to bail themselves out from the impasse,” he adds.
However, one thing appears certain that the future direction of the market is expected to be guided by the course of the Iraq war and its impact on the trade and industry but there is no possibility of any major breakthrough.
Energy, textile shares and some blue chips on the other counters led the market advance amid hopes of higher earnings and capital gains both on local and export fronts.
Prominent gainers were led by Pakistan Oilfields, Bhanero Textiles, Rafhan Maize Products, Nestle MilkPak, and Wyeth Pakistan, which posted gains ranging from Rs5 to Rs20.
They were followed by Blessed Textiles, Faisal Spinning, Atlas
Battery, Shell Gas, HinoPak Motors, Engro Chemical Fauji Fertilizer, ICI Pakistan, General Tyre and Attock Refinery, up by Rs1.70 to Rs4.70.
Losers included Javed Omer, Packages, Gatron Industries, Grays of Cambridge, Pakistan Reinsurance Co, Dawood Hercules and Fateh Textiles, off Rs2.20 to Rs9.
Trading volume showed a modest rise at 130m shares from the previous 90m shares as advancing shares forced a strong lead over the losing ones at 152 to 82, with 39 shares holding on to their last levels.
Hub-Power topped the list of actives, up one rupee at Rs35.85 on 44m shares, followed by PTCL, higher 50 paisa at Rs21.75 on 22m shares, PSO, up Rs6.45 at Rs197.15 on 15m shares, Sui Northern Gas, firm by 50 paisa at Rs22.40 on 8m shares and Dewan Motors up 55 paisa at Rs11.25 on 6m shares.
Other actives were led by FFC-Jordan Fertilizer, steady 20 paisa on 6m shares, Engro Chemical, up Rs1.75 on 4m shares, MCB, firm by 15 paisa on 3m shares, Fauji Fertilizer, higher Rs1.85 on 2m shares and National Bank, up Rs1.05 also on 2m shares.
FORWARD COUNTER: PSO came in for strong short-covering at the overnight fall and recovered to close higher by Rs4.05 at Rs197.35 on 6m shares. Other good gainers were led by Nishat Mills, Engro Chemical, ICI Pakistan and Fauji Fertilizer, up Rs1.25, 1.40, 1.70 and Rs2 respectively 15.75, 79.65 44.70 and 76.50 respectively.
Hub-Power came in for active short-covering and rose by 80 paisa at Rs35.75 on 13m shares followed by PTCL, higher 55 paisa at Rs21.75 on 5m shares and Sui Northern Gas, up 50 paisa at Rs22.45 on 1m shares.
DEFAULTER COMPANIES: Active trading was witnessed on this counter where Suzuki Motorcycles attracted selling at the higher levels and fell by 25 paisa at Rs8.35 on 36,000 shares followed by Bela Automotive, up 30 paisa at Rs2 on 8,500 shares and Medi Glass, unchanged at Rs0.65 on 5,000 shares.