Erratic movement on LSE

An erratic movement was observed on Lahore share market with improvement in turnover, due to various conflicting news, which kept equity values directionless, during the past week.
The news regarding gradual enforcement of new risk management measures, selling of 15 percent shares of OGDC at London Stock Exchange, outflow of foreign investment and, above all deferment of forensic report on March 2005 steep falls of stock markets kept investors in a state of uncertainty and did not let the market move in a determined direction. According to stock experts, the market has turned technically weak and, at the moment, the index is being driven by only a few petroleum banking stocks.
This has led potential investors to be sidelined, they added. Earlier, the index has been moving up by few big scrips on the back of foreign buying. Now with outflow of foreign buying, the market has started weakening, bringing the index below 4,500 mark, an analyst said. The LSE-25 index declined by 54.07 points or 1.19 percent during the week under review, to 4,451.88 from 4,505.95 points. Volume, however, registered an improvement of 9.07 million shares or 31 percent to reach 41.289 million shares from 31.499 million.
The share market portrayed a mixed picture on first day of the week under review, but eventually ended positive, with a marginal gain on news of approval of OGDC's GDR transactions plan by board of the company. The LSE-25 index finished at 4,511.17 points compared with 4,505.95, moving up by 5.22 points. Volume retreated to 23.613 million shares from 31.499 million, declining by 7.886 million shares.
Trading commenced with a positive note and in initial trading, the LSE index was 50 points up, but later the market turned directionless and then kept moving in both sides. The market failed to determine its direction and due to lack of interest from investors' side, volume further squeezed. Because of uncertainty over the issue of forensic report prepared by foreign experts on March 2005 crisis, small investors and day-to-day traders stayed at distance, following which, volume came down. DS Industries and MCB Bank showed positive signs while Adamjee insurance and PSO were the major losers.
Bullish sentient prevailed on the second day, where equities registered gains due to fresh buying in banking and cement sectors, following positive news on economic front, including selling of 15 percent shares of OGDC at London Stock Exchange. The LSE-25 index soared by 59.78 points to 4,570.95 from 4,511.17. Volume was almost steady at 23.227 million shares from 23.613 million shares. The market came under massive pressure on third day as selling erupted in key banks and petroleum shares following profit-taking, leading the market to undergo losses.
The LSE-25 index declined by 50.67 points to 4,520.28 from 4,570.95. Volume, however, improved to 28.836 million shares from 23.227 million shares. Local market was range bound on second last day of the week and failed to determine direction on account of persisting uncertainty, however, rumours about new OGDC discovery in Sindh generated fresh buying in OGDC and banks.
Share values received massive battering on the last day and the market finished the week with a net loss of 96 points, following selling pressure in exploration companies' shares and prime banking stocks. The LSE-25 index retreated to 4,451.88 points from 4,547.82, losing 95.95 points. Volume increased to 41.289 million shares from 27.169 million, denoting an increase of 14.120 million shares.
The market made a positive opening and showed a visible improvement in initial trading, ignoring the Peshawar and Lahore bomb blasts. In the pre-prayer session, the sentiment was bullish and index was on the upper side, however, in last minutes pressure emerged which placed the index in minus zone.
The persisting weakness of the market was expected as now it stands fundamentally weak for the reasons such as below expectation results of companies, declining trend in price of petroleum sector and banks, which contribute 60 percent of the total market turnover, an analyst said.
According to him, foreign buyer, a major source of recent surge in petroleum sector, is going out of the market gradually, which has further dampened the sentiment.
Likewise, risk management measures are to be implemented in phases and exposures and netting regime is also eased out, which is good for the market but KSE move to allow only a limited number of companies to participate in CFS might cause a sense of disappointment among the remaining players. "I foresee further weakness in the market with the KSE index going down to 10,000, therefore, people should restrict themselves only to small banking stocks," he observed.