Market follows power-politics

ISLAMABAD - Following the highly tricky power politics that is in full swing in the country, Pakistan's capital market during the week ending Friday last could undergo hardly any change with bulls and bears staying neck and neck.

Initially, the market read the news of Pakistan Muslim League (N) leaving the federal cabinet as positive and opened the week under review with a bullish tone. However, cautious approach on part of a majority of investors didn't allow the market to gain much. Apparently, it was gaining but pundits termed the market improvements as partial recovery on Monday last. Despite the bullish mood of the heavyweight brokers who were happy over the resignation of Ishaq Dar as Finance Minister, small investors were bearish. Insiders believe that the leaders of the brokers' community, most of them having tilt towards either President Pervez Musharraf or Co-Chairman PPP Asif Ali Zardari as against PML-N, were uneasy with Dar as Finance Minister.

Irrespective of the political differences, the brokers' community and portfolio investors in general were perturbed over Dar's mood not to extend the capital gain tax exemption available to them since 1975. Therefore, the market players were again hopeful of getting this exemption extended for another year after the change of top face in the Finance Ministry.

Apart from the specific measures of Dar as Finance Minister, the stock market players were not comfortable with him for his approach being that of an auditor as compared to that of former prime minister Shaukat Aziz who used to treat them in a banker's way.

However, the excitement over Dar's departure from the Finance Ministry could live hardly up to the midweek. The market gained cautiously on Monday last. It was termed as bullish after it had bagged over one and a half percentile on Tuesday last. And it was again ranged-bound when it could not soar even by half a percentile on Wednesday.

Last couple of sessions of the trade on the domestic bourses was clearly bearish. Pundits underlined divergent pulls in the market. They believed that the big fish of the market was to go bullish after the Zardari-Musharraf power-sharing deal achieved a landmark milestone with PPP-PML (N) parting ways. At the same time, the small investors were weird of the growing political uncertainty after the break-up of the ruling coalition.

Contrary to the market big fish that never bothered about the touchy issues of the public like the judicial crisis and the price hike, the general investors in the market were bearish. The overall sentiment of the market was a true replica of the masses' morale that was down after the collapse of the ruling coalition that had diminished their hopes on judges' restoration.

Therefore, the market on the last couple sessions went bearish losing around two per cent in aggregate on both days. It bagged net loss of three-quarters percentile on Thursday last and well over one per cent on Friday last on the benchmark of the country's mother bourse. In nutshell the market moved from the level it started the week under review by only a few points on the predominant index.

Hence the pundits were with their fingers crossed on forecast of the market ahead. For small investors only the stop-loss order was advisable.

Keeping in view the prevalent political perplexity, rather general advice for the market ahead was to stay on the sidelines.