960410

Heavy short-covering

pushes index up

RECORDER REPORT

KARACHI: Most of the share values closed on a subdued note but active short covering in some of the leading shares enabled the index to finish partially recovered on Wednesday.

In early trading there was a selling pressure from the jobbers and punters, who booked available capital gains. But the pressure was well-absorbed by some of the leading brokerage houses and major player. They seemed to be sure that buying at this level would bring in some good returns in the sessions to come.

According to an analyst, the investors wanted to square their positions and not to build long positions as the market is oversold in the sense that there may be a delivery shortage in certain shares. He felt that some buying interest may surface in the next sessions.

He further said that the market was in a flux as local speculative forces placed hectic deals. They first built long positions in patches and then resorted to profit-taking at the first available opportunity. Wednesday's rise was an artificial rally and would not last long as people were just covering their short positions and there was lack of demand from genuine buyers.

The KSE index depicted a rise of 3.77 points and settled at 1548.82 as against 1545.05 of Tuesday. The major losers were Fateh Textile (Rs 10), Dadabhoy Insurance (Rs 4), Engro Chemical (Rs 3), Pak Oilfields and PSO (Rs 2 each), Packages, Philips Electrical, Pak Gum, Mustehkam Cement and Fazal Textile (Re 1 each) while improvement in some of the base shares including KESC, Universal Leather, PTC and Hub Power averted the larger decline.

Analysts were of the view that the market would face a correction and values would fall due to some technical factors before budget. One such factor, the analysts cited, was the IMF move to introduce value-added tax on all goods at manufacturing, import, wholesale and retail stages which could dampen the investors' confidence.

According to a leading brokerage house, a lacklustre session resulted in marginal gain. As the index was constantly falling for the last few sessions, a minor correction was expected. Buying was there in some scrips but not enough to lift the sentiment. The announcement of a new date for Banker's Equity Limited privatization also had a positive effect on Wednesday's sentiment.

Meanwhile, the KSE authorities pointed out that the tax men were harassing tax payers and great hardship was being caused to the investors due to anomalies in the tax system. The investors preferred to sit with their fingers crossed until the acceptance of KSE's demand for tax exemption on bonus shares, withdrawal of wealth tax on shares and other exemptions.

The volume on Wednesday amounted to 36.340 million shares as against 52.915 million shares of Tuesday. Local institutions struck deals in PTC, Hub Power, Fauji Fertilizer, Lucky Cement, PSO, KESC, Bank of Punjab and Fateh Textile.

Modest recovery in the index on the basis of short covering in PTC and Hub Power does not reflect the real trend of the market. Because of heavy weightage any increase in both these pivotals leads to significant rise in the index. Generally the sentiment was depressed and the bourse seemed in great need of fresh capital.

According to a leading trader, nearly every entity is in a fix. Even the leading corporate brokerage houses in the country are facing a tough time these days as foreign investment is dwindling and investors are running away from the emerging markets, especially Karachi, owing to law and order situation and somewhat botched handling of some of mega issues listed for privatization, especially PTC, by the government.

Although losses were mostly in fraction, they were spread to all counters. Selling was not that aggressive but the absence of leading investors pushed the prices down. At the end among the 359 changes, 179 landed in the minus territory as against 107 gainers, while 73 issues were pegged at their last levels.

PTC on a business of 16.807 million shares was pushed up to Rs 32.15 from Rs 31.80. Telecard lost Re 1 and Pan Islamic 50 paisa, while Pak Datacom showed a small rise of 15 paisa.

Hub Power on a volume of 14.141 million shares registered an increase of 40 paisa to Rs 28.85. Prominent among the losers on this counter were Shell (R) Rs 12 and Pak Oilfields and PSO Rs 2 each, while KESC on a business of 76,000 shares recovered Rs 2.25 to close at Rs 30.75.

Fauji Fertilizer on a total turnover of 1.340 million shares slipped from Rs 74.45 to Rs 74. Engro Chemical suffered a setback of Rs 3, while Colgate Palmolive, Cyanamid and Dawood Hercules showed an improvement of Re 1 each.

Lucky Cement on transaction of 771,000 shares ended with a gain of 25 paisa as against its overnight level of Rs 16.05. D.G. Khan Cement (R) from the same counter remained unchanged at 75 paisa, while around 190,500 shares changed hands.

IGI Insurance declared a dividend of 30 percent on earning a net profit of Rs 39.118 million. Gulistan Textile, despite earning profit to the tune of Rs 15.714 million, skipped payout for the year ended September 30, 1995.

BOND SECTION: The buying and selling rate of FEBC remained unchanged at Rs 106.50 and Rs 106.75 respectively.

PROVISIONAL COUNTER

Open Close High Low

FFC Jordan 15.80 15.85 16.15 15.50

Turnover: 2,177,500

BOARD MEETINGS:

Crescot Mills 11-4-96

Mirza Sugar 14-4-96

Century Ins. 18-4-96

Liberty Mills 2-5-96