20000131

Widespread falls on KSE

RECORDER REVIEW

KARACHI: The share market during the week recorded widespread falls which intensified the selling pressure and index lost over 100 points at the fag end of the week. Bulls tried to stage a comeback and recover some of the losses but cautious approach from the big houses failed to revive a rally.

The opening of the week was quite drastic one and depressed the mood of the investors. During the first two sessions of the stock market the index lost nearly 180 points and it appeared that bears have tightened their grip.

The decline was partly attributed to technical correction at higher levels. Weak holders offloaded their holdings in haste to save their skin. Furthermore, the market received tremendous selling pressure when the New York Times report hit the market that the US had implicated Pakistan in the hijacking case endorsing Indian view.

After every passing hour number of sellers increased substantially and buyers left the field open for the bears. Panic stricken weak holders and small investors offloaded their holdings as soon as possible. Every entity was in hurry to get out of the rings before some further jolt is received from the external front.

The foreign investors and financial institutions which had entered the rings in anticipation of privatisation of government units in fuel, energy, telecommunication and banking sectors, withdrew to the sidelines in haste off-loading their shares to book available margin.

However, share prices rebounded and recorded smart recovery in the remaining three sessions of the week following the statement of the President Bill Clinton that the USA had no evidence that the Pakistan government was involved in the last month's hijacking of an Indian aircraft.

This allayed the fear that Pakistan may be declared a terrorist state and hence the investors staged a comeback in the rings.

The market men also derived strength from the report that the IMF and World Bank missions have arrived. The government is expected to seek additional loans from these donor agencies as earlier agreed. The military government is expected to get over $500 million from the IMF and might get loans for poverty alleviation.

A small set back was received during the trading session when the judges refused to take oath under provisional constitutional order. This sent shock waves in the market and prices received a small technical downward correction.

A leading analyst said that judicial shakeup during the week was resolved and confidence was restored. Across the board activity was evident as buying interest throughout the day, taking the market upward by 3.5 percent at its peak. Top performers remained Adamjee, Fauji, PTCL, PSO and Hubco during the last three sessions.

He added that the medium term outlook for the market is positive. Short term outlook for PSO, Hubco and PTCL depends on the breach of their key support and resistance levels. Fauji indicates rise but the stock is overbought and could see profit taking. Engro continues to be range bound but might see some appreciation as the company is going to announce its full year results and is expected to pay a dividend of 20 percent and 20 percent bonus.

Other bullish factors were the announcement by the CBR that IPPs including Hubco and Kapco would be entitled to claim full input tax adjustment against the sales tax paid on purchase of furnace oil and other tax and purchases for power supply and further possible cut in the mark up rates on national saving schemes.

The market is on the upward march and is expected to show some more improvement in the coming sessions. The badla rate of Hubco was 12.50 paisa, PTCL 12.50-13 paisa, Fauji 25 paisa, Engro 50-55 paisa and ICI 4-5 paisa which indicates that there is still room for improvement. However, in case some negative development surface during the week, there is a possibility that the market might receive a correction of 40-50 points.

The KSE 100 index recorded a decline of 103.09 points and closed at 1749.27 from 1852.46 of the previous week. The volume amounted to 1.631 billion shares as against 2.134 billion shares of last week. The market capitalization moved to Rs 445.077 billion from Rs 467.775 billion of week ago.

Hubco on a trading of 102.439 million shares gained Rs 1.50 to Rs 27.80, PTCL on a business of 56.068 million shares moved to Rs 29.35 from Rs 29.25, Fauji rose by 70 paisa to Rs 64.70 as nearly 12.170 million shares changed hands, ICI on a volume of 39.965 million shares closed at Rs 13.15, higher by 55 paisa and Admajee Insurance on a turnover of 8.138 million shares closed at Rs 99.25, higher by Rs 5.75.