Market behaves with uncertainity

The Pakistani stock market closed on Friday the last    day of the trading week (May 12-16, 2008) under     review at 14233 point with an decrease of 54 points     with reference to the closing of the     market at 14287 points on May 12, 2008, the first day of the trading week under review and 04 points up in comparison with the closing of the market at 14229 points on the previous Friday May 09, 2008, the last working day of the previous trading week.

The share market remained under pressure on Friday, the last working day of the trading week under review as investors liquidated their long positions on the blue chips counters amid growing fears the contenders of power on some core issues and doubts about the economic recovery.

An idea of widespread decline might well be had from the fact that at one stage the 100-share index breached through the 14,200 barrier at 14182.10, but thanks to late short-covering in some of the leading base shares it managed to trim the losses.

However, the uncertain political outlook was also well-reflected as the index finally closed down by 146.98 points at 14,232.89 as compared to 14,479.87 a day as some leading base shares remained under pressure owing to week-end selling.

The free float 30-share index also suffered sharp decline of 373.06 points at 16,882.59.

The weakness of the banking sector after lowering of their foreign currency debt rating by the Standard and Poor's (S&P) to B from the B+ halted its recent upward drive under the lead of GDR-based MCB Bank, followed by other leading ones.

Oil shares should have reacted to reports of a fresh record rise in crude oil prices to $127 per barrel, but weak economic indicators did not allow consolidation forces to come into full play, analysts said.

"The reports of setting up of an Economic Council with Shaukat Tareen, a well-known banker, as its convener to chalk out plans for economic recovery has failed to arrest the weekend sell-off," they said.

"As developing situation on the political front is unfolding progressively, the chances of peace among the major contenders of power appear to be a remote possibility despite positive lip servicing," they said. "This bearish factor could drag the market further down in the coming weeks," they added.

Instances of strong selective support were, however, not wanting as a section of investors led by some institutional traders covered positions on those counters that ensure higher capital gains.

Minus signs dominated the list under the lead of Nestle Pakistan and JS & Co, off by Rs50 and Rs28.65, followed by JS Global, National Bank, Attock Refinery, Pakistan Refinery, Habib Bank, Attock Petroleum, Shell Pakistan, Mari Gas, Packages National Foods and EFU General & Co, which suffered fall ranging from Rs6 to Rs26.60.

Wyeth Pakistan and Siemens Pakistan were among the top gainers, up by Rs100 and Rs29.10. Other good gainers included Bolan Casting, Mehmood Textiles, Murree Brewery, Moon Pakistan, Ghani Glass and Treet Corporation, up by Rs3.28 to Rs11.32.

Turnover figure showed a modest rise at 169 shares from the previous 168m shares but losers held a strong lead over the gainers at 221 to 96, with 28 shares holding on to the last levels. Pak Premier Fund led the list of actives, easy by eight paisa at Rs13.12 on 17m shares followed by Arif Habib Securities, off Rs2.60 at Rs190.50 on 11m shares, Bank Alfalah, easy by 56 paisa at Rs55.30 on 10m shares, Engro Chemical, off Rs5.65 at Rs315 on 7m shares, D.G. Khan Cement, off Rs2.67 at Rs93.98 on 6m shares, Honda Atlas Cars, up by 47 paisa at Rs59 also on 6m shares and National Bank, off Rs6.65 at Rs210.10 on 4m shares.

Other actives were led by Genertech, up by Re1 at Rs4.18 on 6m shares, followed by Southern Electric, higher also by Re1 at Rs7.98 on 5m shares and Nishat Mills, off Rs3.90 at Rs112.

Stocks staged a snap rally after early steep fall on Monday as leading shares came in for -active short-covering at the lower levels, pushing the index modestly higher by 58 points at 14,286.61.

The support was, however, highly selective and originated from some of the institutional and speculative traders but remained confined to a few pivotal, notably those, which ensure handsome capital gains at the current lows.

The opening was terribly weak on panic selling caused by fears of collapse of the coalition government after the failure of London talks between the PPP and the PML-N on the i8ssue of reinstatement of judges, the tired bulls at last fought back in the backdrop of a protracted bear-run.

The free float 30-share index, on the other hand, rose by 141.40 points at 16,909.56 pints but well below the session's high on late selling.

The recovery was initiated by the leading shares of the Mansha Group of companies, including MCB Bank Nishat Mills, Arif Habib Securities and leading oil shares, which analysts said, had already touched their lower levels and came in for technical support.

Earlier in the session, wide-spread panic was witnessed in the trading hall as fears of collapse of the coalition government in the centre and its impact on the economy, foreign investment and bourses, triggered nervous selling from all and sundry. After having fallen by about 1,500 points or nine per cent during the last couple of session on persistent selling the 100-shares index opened with 206 points off from the weekend close, Gulfam Ahmad Khan Sherwani of YS Securities said, but the mid-session witnessed the return of the bulls at the lower levels pushing the index to close modestly higher.

"But the near-political outlook is still uncertain as future line of action of the PML-N, whether or not to stay in the coalition, will be a crucial factor for a falling market," he added.

But another leading analyst Ch Anwarul Haq said the market seemed to have already enough of the political maneuvering and bulls might have decided to go along ignoring battles of wits.

"The market was then in a terribly oversold position on most of the blue chip counters and indications were that it might creep to its pre-reaction level in due course," analyst Ch Anwarul Haq predicted, adding "There were some other consolidation forces who hate fresh market fall."

No one could deny the fact that most of the economic indicators, including political at this time are bearish but the market's in-built mechanism to meet such situations in still there and appears to be at work with the start of the new week, he added.

Although the broader market was still weak but not to the extent, to which it had been during the last weeks and revival of active short covering in most of the pivotal, having potential to rise, could sustain the technical rally during the coming sessions also. Leading gainers were led by Arif Habib Ltd Nishat Mills, Adamjee Insurance, Sazgar Engineering and Pakistan Refinery, which rose by Rs5.04 to Rs8.80.

EFU General and Siemen's Pakistan were prominent among the losers, off Rs25.60 and Rs64.40, respectively. Other losses were mostly fractional barring Mari Gas, AKD Capital, National Foods, Dadex, Pakistan Reinsurance, Central Insurance, JS & Co and JS Global, which rose by Rs5.99 to Rs10.

Trading volume fell to 146m shares from the previous 181m shares as losers maintained a modest lead over the gainers at 156 to 139, with 30 shares holding on to the last levels.

Arif Habib Securities led the list of actives, up by Rs3.30 at Rs189 on 13m shares followed by Nishat Mills, higher by Rs5.42 at Rs113.92 on 9m shares, D.G. Khan Cement, firm by Rs2.71 at Rs113.92 on 7m shares, MCB Bank, higher by Rs5.80 at Rs360.80 on 6m shares, National Bank, higher by Rs1.90 at Rs218.65 also on 6m shares.

Bank Alfalah followed them, up 81 paisa at Rs54.26 on 6m shares, OGDC, up Rs1.25 at Rs131.65 on 5m shares, and Engro Chemical, higher by Rs3.99 at Rs323.99 on 4m shares, Norrie Textiles, easy by two paisa at Rs1.79 on 4m shares and JS Investment, higher by Rs2.50 at Rs115.50 also on 4m shares.

The 100-share index on Tuesday, the second day of the trading week under review virtually roared back to its pre-reaction level on strong support on the blue chips counters aided by some positive developments on the financial front after the resignations of the Pakistan Muslim League-N ministers on the judges' issue.

"Press reports that Shaukat Tareen, a renowned banker and former chairman of the KSE, may replace the sitting finance minister Ishaq Dar if resignations of PML-N ministers are accepted was the chief stimulating factor behind the bull run-up," said Gulfam Ahmad Khan Sherwani.

"Tareen is known as a good finance manager." But another analyst Ch Anwarul Haq thinks the buying euphoria, apart from the attractively lower levels attained by most of the other dominating factor appears to be the investor's resolve to go by the market fundamentals rather than the negative political developments.

Gulfam Ahmad Khan Sherwani said the tired bulls were not inclined to await the dust raised on the political front by some of the leaders settles down and were out to invest their idle funds as chances of capital gains are now much higher, he added.

"Enough is enough," he said, and added: "The market ahs already passed through a needed technical correction and being in a highly oversold position warrants a strong technical rebound," The 100-share index finally ended above its resistance level of 14,500 at 14,542.50, up by 255.89 points or 1.79 per cent as leading base shares came in for renewed heavy buying under the lead of MCB Bank, Pakistan Petroleum, Engro Chemicals and Arif Habib Securities.

But on the other hand, its junior partner, 30-share free float index rose by another 457.91 points as it virtually raced towards its pre-reaction peak levels. Plus signs dominated the list under the lead of Siemens Pakistan and Colgate Pakistan, up by Rs74.90 and Rs28.27.

Other prominent gainers were led by Pakistan Services, Tri-Pack Films, Sanofi-Aventis, BOC Pakistan, Packages, PSO, Lakson Tobacco, Sapphire Fibres, Adamjee Insurance, EFU General, EFU Life, MCB Bank, JS Global and JS & Co, which posted gains, ranging from Rs10 to Rs28. Leading MNCs fell by Rs78.65 and Rs25 under the lead of Unilever Pakistan and Nestle Pakistan, respectively, followed by Allied Bank, Century Papers, and Berger Paints, off by Rs2.15 and Rs5.

Trading volume showed a modest increase at 205m shares from the previous 146 million shares as gainers forced a strong lead over the losers at 266 to 50, with 18 holding on to the last levels.

Arif Habib Securities again led the list of actives, up by Rs9.45 at Rs198.45 on 26 million shares, followed by Engro Chemicals, higher by Rs9.01 at Rs333 on nine million shares, Nishat Mills, firm by Rs3.89 at Rs117.75 on eight million shares, D I Khan Cement, steady by Rs1.50 at Rs97 on seven million shares, Pakistan Petroleum, higher by Rs6.50 at Rs270.30 on seven million shares, OGDC, lower 35 paisa at Rs131.30 also on seven million shares and MCB Bank, sharply higher by Rs18.04 at Rs378.84 on six million shares.

Other actives were led by Lucky Cement, unchanged at Rs126.80 on seven million shares, followed by Bank of Punjab, higher by Rs2.61 at Rs57.86 on six million shares and Azgard Nine, firm by 50 paisa at Rs76 on six million shares.

The overnight buying euphoria slightly slowed down on Wednesday, the third day of the trading week under review as leading investors had an overview of the developing political situation before opting for fresh covering purchases.

The 100-share index recovered another 51 points at 14,593.44.

But the oil-fuelled rally, followed by reports of persistent rise in world crude oil prices to $126 plus per barrel, was selectively plus per barrel, was selectively sustained by leading oil shares and for good reasons too, said a leading floor broker, although foreign investors again remained conspicuous by their absence.

Although finished well below the session's peak level of 14,664 points, the 100 share index closed with an extended gain of 50.94 points at 14,593.44 as leading base shares rose further.

The 30-share index on the other hand rose by 125.71 points at 17,493.44. Bulk of the support was confined to leading base shares, notably MCB Bank, Pakistan Oilfields, Pakistan Oilfields, Pakistan Petroleum, and some others which allowed the index to close higher despite late profit0selling.

The buying euphoria witnessed during the last two sessions, however, turned a bit slow as a section of investors had a second thought on the prevailing political scenario, notably visible divide between the major contenders of powers analysts said. The investors' fears about a possible delay in the national budget due early next month owing to resignations of PML-N ministers also worried them on the issue whether or not the capital gains tax exemption would be extended, they said.

But indications are that the current recovery tempo is expected to be sustained in the coming weeks also as bulls may not like an attractive bait of capital gains at the prevailing lows, some others hoped.

"The break-up of a strong coalition government at the centre did worry investors as the future share business outlook may not be that encouraging as widely speculated after the elections," they said, and added "in typical Pakistani political conditions former foes seldom come to terms in the final analysis,"

The unresolved issue of judges may drag on for months as lawyers may pick up thread from where they left during the pre-election days as major coalition partners failed to solve it as they had vowed, they fear.

The market undertone was steady as plus signs held a modest lead over losers under the lead of AKD Capital and EFU Life Assurance, up by Rs46.30 and Rs20.40, followed by Fazal Textiles, JS Global, Pakistan Reinsurance, Lakson Tobacco, Sazgar Engineering, National Foods, Siemens Pakistan, Adamjee Insurance, HinoPak and EFU General, which posted fresh gains, ranging from Rs6.13 to Rs18.28, while Sapphire Fibres and Shell Gas fell by Rs8.50 and Rs8.49 on renewed selling.

Other which also fell include IGI Insurance, Attock Refinery, Dawood Hercules, Neslte Pakistan, and Service Industries, off by Rs5 to 8.

Trading volume rose to 232 million shares form the previous 205 million shares as gainers held a modest lead over the losers at 171 to 167, with 23 shares holding on to the last levels.

Arif Habib Securities topped the list of actives, off Rs3.45 at Rs195 on 21 million shares followed by Norrie Textiles, higher by 67 paisa at Rs2.53 on 16 million shares, Bank Alfalah, up by Rs1.20 at Rs56.10 on 14 million shares, Nishat Mills, firm by 95 paisa at Rs118.70 on 10 million shares, Pakistan Oilfields, sharply higher by Rs4.80 at Rs426.25 also on 10million shares, OGDC, steady by 20 paisa at Rs131.50 on nine million shares, Pakistan petroleum, up Rs1.50 at Rs271.80 on eight million shares and MCB Bank, higher by Rs5.16 at Rs384 on eight million shares. Other actives were led by NIB Bank, higher by 98 paisa at Rs16.40 on 10 million shares, followed by Azgard Nine, off As1.50 at Rs74.50 on eight million shares.

The share market on Thursday, the second last day of the trading week under review turned mixed as investors played on both sides of the fence apparently awaiting fresh developments on the political and economic fronts after the new team took control of the finance ministry. The 100 index was off 113.57 points at 14,479.87.

Conflicting rumors about the state of economy, falling value of the rupee, lowering of rating of the local currency by S&P and high rate of inflation continued to inspire fresh buying and selling but no one was inclined to take long positions even on the oil sector, being the chief beneficiary of a record rise in world prices, said Gulfam Ahmad Khan Sherwani .

The index finally ended of 113.57 points at 14,479.87 as compared to 14,593.44 a day earlier. Its junior partner free-float 30-share index fell by 237.53 points at 17,255.65 or 1.36 per cent.

The MCB Bank, which again received a massive battering after a steep increase in its share value during the last three sessions, took the index along with it in the minus column owing to its largest weightage in the index followed by some other leading base shares.

The MCB Bank's retreat followed by reports of downgrading of its foreign currency rating by an international agency, floor brokers said.

The opening was, however, a bit higher on spillover demand but the mid-session witnessed the return of the bears, who indulged in profit-selling at the higher levels in the absence of follow-up support from any quarter.

The larger fall was averted owing to the presence of support at dips on selected counters but the steep decline in the turnover figure reflected that investors were in two minds about the future market outlook in the backdrop of shifting positions by the political leaders on some core issues.

"In the developing political situation investors are not inclined to come in a big way despite the fact that the current levels are attractive enough for investment and capital gains," analyst Ch Anwar said.

But most of them are in no mood to take even calculated risks until a clear picture emerges on the political front, which ensures the return of the foreign investors, he added.

"The prevailing volatility reflected that the market might move one step forward and two backward until sanity returns in the rank and file of the contenders of power," some others said.

Some leading shares managed to put on fresh gains under the lead of Nestle Pakistan and AKD Capital, up by Rs55.00 and 48.61, followed by Central Insurance, Mehmood Textiles, Sapphire Fibres, Noon Pakistan, Ghani Glass and Shell Pakistan, up by Rs5 to Rs8.50.

JS & Co and IGI Insurance topped the list of losers, off Rs19 and Rs10.65. Other prominent losers, included Packages, Engro Chemical, Siemens Pakistan, Atlas Honda, Shell Gas, Lakson Tobacco, EFU Life, MCB Bank, and JS Global, off by Rs7 to Rs10.61.

Turnover figure suffered a sharp fell at 168m shares from the previous 232m shares but gainers held a modest lead over the losers at 173 to 166, with 25 shares remaining unchanged.

The active list was led by D.G. Khan Cement, lower by 59 paisa at Rs96.65 on 9m shares followed by Lucky Cement, up 71 paisa at Rs128.11 on 9m shares, Bank Alfalah, off 24 paisa at Rs55.86 on 7m shares, Arif Habib Securities, sharply lower by Rs1.90 at Rs193.10 on 7m shares, NIB Bank, steady four paisa at Rs16.44 also on 7m shares, and Sitara Peroxide, higher by Rs1.97 at Rs 65.30 on 5m shares.

Other actives were led by Norrie Textiles, easy by three paisa at Rs2.60 on 9m shares, TRG Pakistan, lower by 16 paisa at Rs8.24 on 8m shares, Azgard Ninem up 80 paisa at Rs75.30 on 7m shares and Pervez A. Securities, higher by Rs3.84 at Rs96.55 on 5m shares.