950825

Given peace in the

city, the Karachi

stock market

could well rebound

RECORDER REVIEW

KARACHI: The preceding week's recovery was wiped out in just three sessions as the hazard happenings on the political front and the limitations of funds pushed a large group of investors to the sideline.

The majority of the indexed shares came in for selling and buying interest subsided. The index registered a hefty loss of 53.09 points, falling to 1797.13 points as against the 1850.22 points of the previous week, eroding nearly Rs 9.163 billion market capitalization. Turnover was around 34.234 million shares giving an average daily volume of around 11.411 million shares.

Six scrips dominated the trading - PTC, Faysal Bank, Lucky Cement, Hub Power, Dewan Salman and Platinum Bank. But the only positive sign in the last two sessions was the coming to life of some inactive scrips and for the first time in 1995 activity spread to more than 400 companies.

Unabated killings in the city and the murky political scenario made some of the investors cautious who thought fit to retire to the sidelines. However, there was no sign of nervous selling on any counter as the leading dealers held their positions in the hope of more capital gains.

Some of the leading experts anticipated a turnaround in anticipation of the resumption of government-MQM talks. Reports of renewed effort for bringing about a reconciliation between the government and the opposition also helped. Ajmal Khattak's proposed visit to London to meet the MQM chief and Wali Khan was regarded as an encouraging move. They said the effort should go a considerable way in promoting political stability in the country.

The slide in the index was termed as a healthy sign by the main operators who said after a continued rise the market has to face a technical correction. Selective buying continued to be strong under the lead of the financial sector, synthetics, energy and cement.

Some of the issues which had recorded heavy gains in the last two weeks, like insurance companies, came in for profit-taking. But the optimistics still believe that given a positive political development the market would again take to the uphill course because of massive short covering. It could be further aided by the half yearly results expected to be finalized during the next week. With foreign investors' interest lively, there was no likelihood of any prolonged bearish spell, they said.

Trading during the week was restricted to three days as the MQM had called for a two-day strike on Wednesday and Thursday.

On the week opening session, the index depicted a fall of 20.77 points. Buying interest was slack and the continuing violence in the city was of grave concern to many investors who were reluctant to make heavy commitments and build long positions. But the market pundits ruled out any major shakeout in view of the strong support from local financial institutions.

On Tuesday, the equities once again ended lower owing to profit-selling by individuals and some leading brokerage houses. The index also broke the psychological barrier of 1800 points. But many investors were seen switching over to relatively less known shares as they hold promise of good capital returns. Trading was spread to all counters and selling emerged in patches mainly from shorter-term dealers and jobbers who preferred to book profits instead of taking higher risks.

On Wednesday values showed nominal changes and the profit selling of the last three sessions was partly explained as a move toward mobilization of funds for investment in new issues. More funds would be required for those scrips which are expected to be listed at the readyboard in just a week's time. In all six issues are going to come up for public subscription, including Kohinoor Genertek, Nadeem Textile, EFU Life Assurance, Sitara Chemicals, Dream World Limited, and SG Power.

"When these scrips have been fully absorbed by the market then it is expected that the major players will opt for fresh buying," said a stock broker.

Once again, everyone's eyes are fixed upon the government-MQM talks. If peace is restored in this strife-torn city, the market may rebound, because several shares at this juncture are quite attractive bait and could easily give a good return. The Karachi Stock Market is still considered to be the best among the emerging bourses in the region. If only the dust on the political situation settles, a robust rally would be the buzz word.

Khadim Ali Shah Bukhari's review had this to say about the stock market:

"Again the 1800 level was rattled this shortened week as technical corrections coerced the market to plummet by a costly 53 points. A fresh spate of violence over the weekend coupled with clearing day selling activity further aggravated market play. The selling pressure was further fuelled by the investors trying to liquidate their position in order to subscribe to the new issues of Kohinoor Genertek and S G Power.

The unsettling political deadlock of the last couple of weeks was finally broken when the MQM declared the last two trading days as strikes to protest against alleged government harassment against the MQM. The market settled at 1797.13 for the week, falling 2.9 percent since last Thursday.

"Numerous blue-chips stormed to lower levels. Lever Bros shed Rs 14 closing at Rs 825 while Dewan Salman, now beginning to drown under contagious negative sentiment, lost Rs 7.75 to close at Rs 107 for the week. The resilient Hubco, too, felt the pressure that drove it to Rs 21.90 down Rs 1.10 over last week. Even the financials were not spared. Citicorp, Fidelity and Security Bank, all ended at lower levels.

Turnover activity was hardly unusual. Led by the telecom giant, PTC (closing price: Rs 34.95), the last four trading session's volume amounted to more than 46.2 million shares, introduction of the KASB Premium Fund did liven activity during the last trading day of the week. The scrip (face value of Rs 10) fluctuated within a loose band of Rs 11 and Rs 13.5, ending the day's activity at Rs 12.25 with a volume of 237,000 shares.

"Once again Karachi's political volcano threatens to breathe fire. Although the government officials are confident in resumption of the MQM-government talks by the end of the month, and MQM's distrust of the government's inticement against its followers is apparent in the 2-day strike that it has called. Market's reaction next week to these latest developments may hardly be polite. Momentum of this week's profit-taking coupled with the bearish political sentiment could pull the market down to even further lower levels. However, an unsuccessful city-wide response to the strike call may fracture that negative sentiment. Therefore, all political proceedings are to be monitored closely."