Karachi stocks turn volatile

Analysts said it was the weakness of leading oil shares including Shell Pakistan, PSO, OGDC, Pakistan Petroleum, which evoked sympathetic selling on other counters.

Even a higher bonus shares at the rate of 50 per cent by Pakistan Oilfields failed to restore sanity to stock trading.

Bank shares under lead of MCB, National Bank and leading shares on other counters performed well but failed to generate fresh buying in light volumes and falling buying interest.

However, the current sluggishness appears to be psychological rather than genuine as some important board meetings are due before the month is out and they could lure investors back by the next trading week.

Already, Lakson Tobacco and Rafhan Miaze have came out with interim payouts of 20 per cent bonus and 200 per cent cash respectively and some others will follow with identical announcements.

The next week could be dividend-driven week where bargain-hunters and financial investors may be the leading players and in turn push the index to a new high. It was perhaps in this background that KSE 100-share index after having touched its so far career-best level of 12,334 points failed to sustain it in the absence of foreign support and bargain-hunting.

Earlier, heavy foreign buying in the leading oil and bank shares featured stock market but analysts fear duty-free import of cement could have negative impact on the entire market in the coming sessions.

The KSE 100-share index posted a fall of 131.23 points or at 12,007.60 as compared to previous 12,136.83 as leading base shares fell further highe under the lead of OGD, Pakistan Oilfield, Pakistan Petroleum,.National Bank and MCB.

Massive buying in OGDC on new oil finds actively participated by the other index heavy-weights, notably Pakistan Petroleum, Pakistan Oilfields and National Bank fuelled the run-up as some of them closed well above the ceiling rates.

“Essentially, it was the OGDC week being massively heavy weight, which rose by and added more than a half of the points in the total rise in the index,” analysts said and added “others followed them in the same pattern and causing the continuation of the bull-run.” Pakistan Petroleum followed it on its sell-off news, while Pakistan Oilfields rose further ahead of its board meeting but reacted on selling after the announcement of 50 per cent stock dividend.

“The situation is fraught with heavy financial risks atleast for the near-term despite reports of higher interim corporate earnings,” some others said “Duty-free import of cement, plus 60 per cent subsidy on freight could knock out the bullish cement sector from the list of trend-setters having negative impact on the broader market.”

Lucky Cement, Fauji Cement,Pakistan Cement, Dewan Cement and some others remained under pressure on persistent selling after the news of duty-free import of cement reached the market to ease the local prices, which had risen sharply higher despite government warning to the producers.

The oil sector could keep the index in a positive mood but it could not take along the entire market for longer period and there are technical implications for similar situations,” they added.

Nestle Pakistan and Unilever Pakistan were leading among the gainers, up Rs.15.00 and 91.00, while losers were led by Treet Corporation and Rafhan Maize, off Rs. 17.65 and 37.00 respectively.