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Stocks back on rail on strong short-covering

KARACHI — Pakistan stocks last week were back on the rails aided by strong short-covering at the lower levels in the leading oil shares after the denial of counter coup rumours, signalling that the existing set up is well in place to ensure continuity of the financial policies.

The future share business outlook appears to be a bit bleak in the backdrop of US pressure on president Musharraf to doff uniform and hold election in time and in the developing situation investors,notably foreign ones may not fresh commitments even at the lower levels, analysts.

Benazir Bhutto threat to launch agitation against the president and a long march from Lahore to Islamabad on Nov 12 also was an instant depressant, which analysts said could lead to violence and law and order situation in the coming weeks. The KSE 100-share index, however, opened sharply lower, what the dealers called, an extension of the previous sell-off and at one stage it fell to session's low of 13,075.5 points.

But late short-covering in most of low-priced base shares pushed it up to finish well above the week's lows and highs at 13,188.00 and 13,500.The next fall over the week was of the order of 491.17 points at 13,428.00.

The total market capital fell by Rs146 billion at Rs4,096. as compared to Rs4,242.00 a week earlier.

Active short-covering in the leading base shares, notably National Bank, Pakistan Petroleum, OGDC, Attock Refinery, and Engro Chemical was the chief supporting factor behind the index's recovery. "Political uncertainty is still there but what seems to have aided the recovery was the perception of continuity of existing financial and economic policies as the previous set up is in command", said a leading analyst.

However, foreign investors stayed away and may not resume fresh covering purchases until sanity returns to prevailing turmoil, he added.

But some others said the rally appears to be "inspired" as bulk of the support remained confined to most of the safe havens and investors were not inclined to go beyond them atleast for the near-term.

"It is a very unusual situation, notably for a stock market, which is essentially is not cherished by the investors", said another analyst adding "next couple of sessions will show how the wind blows and dust settles down on the political front".

Nestle Pakistan and Siemens Pakistan led the market advance, up by Rs80 and 97 but it did not signal the return of foreign buyers, followed by Fazal Textiles, Thal Jute, Pakistan Resource Co, Attock Refinery, Attock Petroleum, Pakistan Oilfields, Pakistan Petroleum, Indus Motors, Pak-Suzuki Motors, BOC Pakistan, Pakistan Engineering, PSO and Colgate Pakistan, which were quoted higher by Rs10.00 to 31.80.

Adamjee Insurance and Lakson Tobacco were leading among the losers, off by Rs19.55 and 27.20 respectively. Other notable losers included JS Global,JS & Co, New Jubilee Insurance, KSB Pumps, Dawood Hercules, Mitchell's Fruits Shezan Internationl and MCB, off by Rs8 to 18.65.