950804

A week of ups and downs on KSE

RECORDER REVIEW

KARACHI: Bulls struck back as re-emergence of foreign demands, well supported by the local institutions helped nearly all scrips inch up, but the upward swing was shortlived and renewed violence dragged the index down at the fagend of the week.

At the beginning of the weeks, equities once again leapt into life with the bulls stagging a comeback with a bang. Prices rose in unison on heavy bouts of buying. Besides leading investors, speculators and bargain-hunters and institutional buyers mopped up sizeable lots of selected issues. The much awaited buying from NIT and ICP was surfaced following the withdrawal of exemption from off the floor trading by the government some three weeks ago.

Another factor which refinforced the bullish sentiment was the emergence of foreign demand on selective issues. The KSE index surged to new heights after long spell of recession, and during the week it crossed the coveted mark of 1800 and settled at 1801.32 points, indicating a rise of 77.14 points. In terms of market capitalisation, it was a gain of about Rs. 12.705 billion.

According to an analyst, thrilled were the optimists, unnerved were the pessimists and cautioned were the realists. This is how the story went for the week. The market has been able to sustain its upward drive and has discounted the fears arising from a deadlock in MQM-Government talks, still pinning their hopes on some sort of positive outcome.

Cement, one of the favourite sectors during the pre-bear run period; showed signs of support during the week. The imposition of levies on imported cement has effectively made it more expensive and the local cement plants should reap benefits because of this.

The banking counter was also very buoyant and received active support. Investment banks also surged up as they received active suport due to appreciation in the value of their equity portfolios during the current upward drive.

Several leading brokerage houses during the week re-entered the ring on the behest of foreign fund institutions who had been patiently waiting for the investment. They made such a move, though within the limits as they seemed to be losing their patience in the hope of a quick decision of further talks between the government and MQM.

"Investors seemed to have been buoyed by the perceptions that after all, the quarters of the country have reached a consensus that peace should be restored in the city at any cost", said a stock dealer.

Market circles sensed the winds of change are blowing as oversold position aided with relative calm in the city has attracted fresh buying. Factors that will have a bearing on the future direction of the market are manifold. Market perceptions regarding chances of improved political climate and probability of an upswing in the macro-cycle are just two important considerations.

An analyst said that all the basic fundamentals of the market are bullish and inact, and all that needs to be given a big push to the market was peace and sense of security. Once normalcy is restored, the market will boom with great fervour. Several research analysts anticipated a progressive increase in the share price index for over 300 points during August but the "buzz word for the spell of buying ephouria is the improvement in the law and order situation", he said.

The market index has broken through the 1800 points level, but it is still a long way from attaining the peak of 2664 points, but if the tables are turned, the market can regain lost ground before the end of the year, or could even cross the highest level touched during 1994.

Several investors expressed concern over the US directive to Americans not to go to Karachi and even not to come out of transit. The declaration of Karachi as 'danger zone' indicated that a fresh violence is somewhere around the cornor, and this unnerved the investors who were cautious to book lots.

But on Tuesday, the picture was quite different and the bullish trend indicated that for the time being the certainty arising from non-participation of the MQM in the fifth round of Karachi peace talks receded into the background. "With the commencement of the new clearing period, renewed buying from the foreign fund managers and active support by the local financial institutions lifted the stock values by a hefty margin.

On Wednesday, equities slid by a massive 36 points mainly due to the re-eruption of violence. The new wave of uncertainty wiped out the air of optimism following the news about the killing of an MQM worker.

Billions of rupees once again went down the drain and sentiment had been taken hostage by the city situation and issues arising from the political front were again dictating the market.

The weekend session also opened on a weak note as more news of violence poured in where about 24 people died in different parts of the city. The attendance in the rings was also thin resulting in reduced volume. But the significant feature of the trading pattern was that selling did not reach an alarming level and every order was absorbed at all counters.

Analysts said that there was nothing wrong with the share market. All its fundamentals were intact and small correction due to city's disorder apparently seemed to be healthy sign. Small hiecoughs may consolidate the base of the market, but if the spree of killing increases substantially, the values may reach their new low.

But the market's paltry drop indicates that the oversold position may attract goods offers, it is evident that apprehensions concerning the political outlook are holding back capital inflows, despite the calling of economic/financial fundamentals and technicals. However, analysts feel that most of all, the bad news is already in the prices. Any breakthrough in the city situation would initial confidence to investors. A likely turn in the macro-cycle, engineered by a good cotton crop, could then carry the market to the end of 1995 to 1996.

The total transactions during the week also exceed the 100 million mark as some asserted that the worst was over and the situation is quite ripe for the index to reach the 2,000 level in the next week. Business during the week amounted to 101.964 million shares giving an average daily volume of 20.394 million shares. The share of four scrips namely PTC, Dhan Fibres, Faysal Bank and Hub Power accounted for 55 percent of the turnover.

The major share was credited to PTC as about 18.583 million shares changed hands and the value of the scrip depicted a small rise of 10 paisa and ended at Rs. 35.10.

Faysal Bank claimed second rank and on a business of 13.666 million shares showed a healthy rise of Rs 1.15 and settled at Rs. 32.

Dhan Fibres bagged third position as turnover to its credti was 13.392 million shares. The issue moved up to Rs. 12.70 from Rs. 10.50

Hub Power has maintained its position from last month and the price of the scrip is oscillating between Rs. 18 to Rs. 19. The issue during the week appreciated 85 paisa and closed at Rs. 19.20 while the turnover was around 9.601 million shares.