LASCOP

Pakistan’s capital market moved both ways during the week ending Friday last as external factors including the economy and politics remained uncertain while promising corporate performance lured foreign investors that too failed to improve volumes.

Analysts described the volume of trade at 170 million shares in a day as the highest in last nine months. It clearly indicated the market moving with alarmingly squeezed volumes during the last year or so since turnover less than even 200 million shares has turned to be the highest in the market that had traded 500 million shares in a day in good old times.

Market opened the week under review with continuation of the bearish sentiment lingering on from the preceding week. Foreign players that had remained constant buyers in Pakistan also corrected their portfolios leading to nearly a percentile’s fall in the indexed value of the local bourses during the week that was.

Pundits were of the view that the Egypt crisis and global markets with a weak posture had forced the foreign fund managers to square their positions in the Pakistani stocks. Thus stocks continued shedding but the market’s positive undertone resisted and Karachi Stock Exchange’s predominant benchmark called the KSE-100 index managed to clip losses as compared to the preceding session. Still the country’s mother bourse’s barometer fell by three quarters a percentile on Tuesday last.

Bullish sentiment emerged on midweek session chiefly banking on the unchanged monetary policy and the central bank’s foresight of two to three per cent economic growth during the ongoing financial year despite worst impact of floods and war on terror. But the bears maintained their sway throughout the first three sessions of the week that was. On Wednesday last the bulls and bears came neck and neck, however, negative sentiment managed to last till the brokers called it a day. The KSE-100 index booked another loss though only that of a quarter percentile.

Last couple of sessions appeared to be the bullish reaction. Market bettered by a percentile and nearly half a percentile on Thursday and Friday respectively. Analysts were of the view that the foreigners renewed their interest in Pakistan’s banking sector eventually to reverse the 4-day bearish spell. Bullish spree continued till Friday, the last working session of the week under review but not with that force as it had experienced during the preceding session.

According to analysts, foreign fund managers were maintaining their constant presence in the domestic stock trade as they were not getting such an attractive business anywhere in the region. Pakistani stocks have been offering better return to the foreign players as compared to other emerging markets. Secondly, they find more predictability in Pakistani market for it being too small as compared to other emerging markets.

Economic uncertainties like the fate of International Monetary Fund’s Stand-By Agreement (SBA), delays in introduction of much-awaited leverage product, rumors about the withdrawal of deemed duty for refineries, and growing fiscal deficit were to nourish bears on bourses. At the same time corporate performances promising handsome periodical payouts, hopes pinned to the Monday (today) meeting of the Karachi Stock Exchange and the Securities and Exchange Commission of Pakistan on the leverage product, and government’s drive to cut down the size of the cabinet were taken as positive factors by the stock market players.

According to insiders, the Finance Ministry as well as the Law Ministry had already cleared the draft of the leverage product while the SECP was reluctant to go ahead with it. The corporate watchdog was incapacitated having only two commissioners including the Chairman as against the law’s requirement to have minimum of five commissioners at the SECP.

It is pertinent to mention here that the market has been declining to discount its strength due to the prevalent political uncertainty in addition to the scary law and order situation, especially in Karachi the home of the mother bourse besides being financial capital of the country. Therefore, pundits opined that the market would continue moving clearly according to the internal as well as external economic factors least bothering about the political developments and untoward security occurrences.