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Investors' interest spreads

RECORDER REVIEW

KARACHI: The share of selected scrips in the weekly business went down from 60 to 49 percent, reflecting the spread of investors' interest to other counters. This apparently helped the price level to close over the 1800-point chart.

Values generally moved in a tight range and during two trading sessions the tally of losers and gainers matched. An air of uncertainty gripped the bourses as MQM's participation in the fifth round of talks remained unconfirmed insistence from government quarters that best efforts were being made for the resumption of talks triggred speculative buying.

Investors, especially the financial institutions, concentrated their attention on the risk-free blue chips and considered these issues as safe havens. The current low prices were an attractive bait to any discerning investor, said an analyst.

Profit taking began to emerge on reports of waning hopes of resumption of talks and due to the growing tension between the government and the MQM because of the Interior Minister's provocative statements. What disturbed the investors and made the setting of future lines of action difficult, was the perception that no confidence-building measures were being taken to reduce the mutual mistrust.

The situation is so uncertain and fluid at the moment that even a slight spark on the political front could easily wipe out the current recovery. However, if there is any progress on the political front, the share market may well consolidate its gains next week and prices could once again rise and even reach the pre-reaction level.

According to a few market watchers, the bears may have a filed next week. They fear that rumours of the creation of another faction in the MQM and the arrival of more law-and-order personnel in the city, indicates that the law and order situation may deteriorate. Others concede that the prices may, suffer some correction, but rule out the possibility of an escalation in violence because of the seriousness of the government in dealing with alleged terrorists which ostensibly, has already started paying good dividends. Relative calm that prevailed last week has helped the market to soar.

The current renewed buying can be attributed to a number of factors including local and select foreign buying and, in patches, speculation. Investors now seem to discount all fears in favour of the low prices and are taking new positions to offset their paper losses, carried by them since the onset of the bear run. Furthermore, the arrivals of some new mutual funds and their buying at the attractive levels also pushed up the index.

Furthermore, market activity has shifted focus from a select number of stocks and spread across the board. According to a leading research analyst, to an extent the market can be classified as a dart board market as even the fundamentally weak and former inactive scrips entagled in the favour have been dragged along with the bullish tide.

On Sunday, the index was modestly up as short-term dealers and jobbers resorted to profit-taking. Fear of fresh violence was still hanging in the air and according to an analyst any adverse city development may wash away all the benefits earned over the period.

The KSE index maintained its uphill course in the presence of select support. Institutions and foreign buying placed several deals in scrips like PTC, Hub Power, Dhan Fibres, Lucky Cement, Faysal Bank and interest in the indexed shares showed no sign of warning.

On Tuesday the trading pattern changed and support from a some-what inactive sector built up. An imporvement in auto and allied sector lifted the whole market and equities surged to 14.05 points. But the activity due to the long week-end remained slack. But on Wednesday profit taking emerged in a big way and the values received a fresh jolt. But there was a general belief that the pause was temporary and the market would resume its forward thrust from next Sunday, said a stock broker.

There is also possibility that the uncertain law and order situation and the issue of talks between the government and MQM may not dictate the market for the time being. The recent corporate announcements, some of which have come upto the expectations of the investors, may determine the course of the market as the prices are bound to react favourably to them, some analysts say.

Many observers are sanguine that the market may witness a boom before the year is out. The fact that the arrgregate market capitaliation has risen to Rs 335 billion in the past two weeks builds confidence in the future of the market.

A research analyst of Khadim Ali Shah Bukhari does not share these views about the market. He, said the mood of the buoyant market turned cautious during the week. The index was able to sustain the 1800-point barrier, although the market proceedings remained dull during the session, in view of the long weekend ahead and the shorter than usual settlement period, he said. Volumes remained subdued as investors kept to the sidelines debating over the possible direction of the market next week.

The market managed to shrug off the fears arising from the deadlock in talks between the government and the MQM and the underlying sentiment remained cautiously positive, if not as buoyant as in the past week. Furthermore, the investors were not willing to carry their positions and lack of interest can be gauged by the fact that the average daily volume halved to 12.77 million from last week's 24.1 million shares.

KASB further said that the auto and allied sector attracted renewed buying and almost all the notables posted considerable gains. Millat Tractors and Al-Ghazi Tractors went up by Rs 14 and Rs 28 to close at Rs 76 and Rs 70 respectively. Indus Motors moved up by Rs 6.30 to close at Rs 23.30 and Pak Suzuki by Rs 6.50 to end at Rs 31.

KASB felt that sentiment was at a crucial turning point now. The market has broken out of its 1450-1650 range. Many investors have missed the recent surge (nearly 200 points in matter of three weeks). The recent profit taking will be met by the latecomers thereby limiting the downslide. The market should also take the lead from the expected half-yearly results of many of the banking and fertiliser heavy weights which are expected next week. Also formal listings of Premier Fund, 1st Capital Fund, Tri-Pack and TeleCard will also buoy up the interest of the week-to-week players and provide opportunities for investors to offset paper losses. Short-term risk lies in the post-August 14 scenario and how the MQM seeks to recover its lost ground as the government strives to gain the upper hand in the Karachi conflict.

Total transactions during the week settled at 47.321 million as against 101.964 million shares of the previous week, giving an average daily volume of around 11.93 million shares. The share of five scrips Hub Power, PTC, Faysal Bank, Dhan Fibres and Lucky Cement accounted for 49 percent of the turnover.

The major share went to Hub Power as about 5.743 million shares of this scrip changed hands and the value of the scrip depicted a rise of Rs 1.25 to end up at Rs 20.50.

PTC claimed second rank and on a volume of 5.713 million shares showed a meagre increase of 10 paisa to close at Rs 35.20.

Faysal Bank bagged third position and after total transactions of 4.963 million shares went up to Rs 32.25 from Rs 32.

Dhan Fibres moved down to fourth rank from third during the week and on a volume of 4.123 million shares recovered 20 paisa to close at Rs 12.40.

Lucky Cement on a business of 2.807 million shares posted a healthy rise of Rs 1.75 to finish at Rs 23.50.

The KSE index consolidated its gain during the week and went up by 20.85 points and closed at 1823.27 from 1802.42 registered during the previous week.