Stocks tread on roller coaster ride

KARACHI — The new 30-share KSE index last week made a firm debut on the strength of leading shares, which form its base of 10,000 points but it failed to sustain the early run-up on selling triggered by more than one inhibiting factors.


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Published: Mon 11 Sep 2006, 9:39 AM

Last updated: Sat 4 Apr 2015, 4:19 PM

Both the indices passed through a virtual standoff caused by some psychological depressant but managed to finish above their bench mark levels despite highly erratic performance turned in by the leading oil, bank and cement sectors.

While 30-share index held well above its base of 10,000 points at 12,428.06, the 100-share index breached through the psychological barrier of 10,000 at 9,965.21.

But falling daily volumes reflect investors fears about slow down in economy, rumoured lowering of Pakistan rating by a foreign company and higher interest rates worried investors , while the prevailing political uncertainty in the wake of tension in Balochistan also taking its toll in the form of widespread price eroisions.

"I don't think investors will opt for long-term buying on any of the counters until sanity returns to the political background news and the prevailing uncertainty ends", Faisal Abbas a leading stock analyst said.

The market performance may remain choppy as leading financial institutions are playing safe until the investors are assured that the current political polarisation is defused by some positive steps by the government, he added.

There are more than one investor worries both financial and political but notable among them is lack of demand from any quarter.The market appears to be victim of demand rather than any other single factor.

Late recovery staged by the market trend-setters, notably banks followed by reports that some foreign investors are interested to have stake in local banks, either total buyout or in the form of participation in the management.

Standard Chartered Bank as already purchased the controlling shares of Union Bank and sell-off of some others is rumoured. Trading resumed on a higher note on early buying in some of the blue chips but the mid-week selling at the inflated levels pushed them down. Heating up of the political scenario in the backdrop of Nawab Akbar Bugti's death and fears of law and order situation appears to be one of the chief inhibiting factor behind the market current votality,says a leading floor broker.

Both the newcomer 30-share and 100-share indices after opening higher also followed the lead of the general market trend and fell despite attempted rallies triggered by active short-covering on selected counters.

Analysts said investors are still confused about the two and in the absence of proper guidance from the leading brokerage houses to their clients the confusion continues.

"The big question among the prospective investors is which one of the two fully reflects the future financial outlook of the market and where to invest",they said adding"physical activity in the coming sessions is expected to will show how and where to invest in the prevailing conditions."

Some analysts said the new index is expected to significantly add to daily volumes after investors fully understood the mechanism behind the two and there impact on the broader market.

Some of the hereto inactive shares managed to finish higher by Rs10.35 and 18.50 for Treet Corporation and Pakistan Services followed by Bata Pakistan, Pakistan Suzuki Motors, Javedan Cement and some other also rose.

But leading shares, notably Dawood Hercules, Atlas Honda, Pakistan Petroleum, Pakistan Oilfields, OGDC, National Bank, MCB, Attock Petroleum, IGI Insurance, PSO, National Refinery and many others finished with sharp fall.

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