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Healthy results from corporate giants failed to jack up the share prices at Karachi Stock Exchange last week and index lost over 100 points in the process where turnover was on the lower side, indicating less participation from seasoned and big institutional players.
The market was standing in an oversold position and the news of assassination attempt against Shaukat Aziz further battered the market on Monday. However, for the forthcoming week, traders were hoping that the market would come out of the doomed phase and would move in the positive direction.
The equity market witnessed some correction during last week. Higher badla rates and investments, lower-than-expected result announcements by some leading corporate giants, and lower volumes owing to CVT imposition were primary reasons for this downward trend.
The week started on a negative note with the index declining by 1.17 percent on Monday due to high badla rates. The bearish sentiment continued the next day and the index fell by another 0.59 percent on Tuesday.
Wednesday, however, witnessed a reversal of some of these losses, primarily due to anticipation of bonus issue by PSO, FFC, Askari Bank and Bank of Punjab.
The announcement of results by PSO, though in line with market expectations, disappointed investors due to the lack of declaration of a bonus. This proved to be the prime catalyst for 0.89 percent decline in the index on Thursday.
The bearish spell continued on Friday despite the announcement of a 47.5 percent cash and 15 percent bonus interim dividend by Fauji Fertiliser, leading to a further 0.25 percent decline in the market.
On the whole, the index lost 2.24 percent and closed at 5,290.04 on Friday as opposed to 5,411.07 in the previous week.
An analyst from KASB Equities expected that the market would continue its pattern of negative consolidation this week, as major corporate announcements failed to lift the investors' spirits.
While the results were positive, they proved inadequate for triggering a spark in the market mainly due to the investors' illogical passion for bonus issues.
Furthermore, retailers are unlikely to play an active part in the market owing to fact that around Rs 20 billion are stuck up in PPL subscriptions.
Institutional investors, too, appear reluctant to participate in the market due to the prolonged bearish spell.
"We expect this trend to continue until the completion of the balloting process for PPL and the by-election to be held in middle of August. However, we do anticipate that trading volumes will pick up after the allocation of PPL shares to investors."
Initial reports indicated a massive subscription figure for PPL. About 690,000 plus applicants had been counted and the PC was yet to get the subscription record from some of the larger banks.
Another important development which took place during the week was the announcement from OGDC that the company had initiated operations in Chanda field and was expected to produce 10 million cubic feet gas and 2000 barrels oil per day.
Due to erosion in equity prices, badla investment also declined during the week. The weighted average badla rate came down significantly and stabilised in the single-digit range.
This might help the index to recover some of its lost points but as there was no positive news to cheer up the investors' mood.
The index is likely to remain depressed. The incident on Friday, an attempt to assassinate the designated Prime Minister, Shaukat Aziz, could send grave signals to investor community. Around nine people were killed and 35 injured in a suicide-bombing attack.

Copyright Business Recorder, 2004

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