Equities during last week staged partial recovery on the Islamabad Stock Exchange (ISE) under the lead of hot favourites where bulls and bears had a close fight amid buying in select stocks. ISE Network index moved upward from 12,213.83 points to 12,308.31 points. The overall turnover ranged from 10,14,700 shares to 26,32,000 shares. Total 120-145 companies were quoted on the ready board. Analysts said that the ISE network index remained under pressure throughout the week owing to fears of phasing out of COT.
Badla and SBP's monetary tightening stance: This dented the impact of good earning announcements by most of corporates for the quarter ending Mar 31, 2005.
On Monday, the market opened on a positive note on the back of agreement of the banks to arrange Rs 20 billion to facilitate margin financing. However, the market failed to maintain the momentum due to confusion over new rules for futures, despite better-than-expected results announced by major companies, including PTCL and OGDC. FFC remained the choice of investors on Tuesday on the back of unexpected bonus announced by the company. The market once again came under pressure as the SBP increased the cut-off yield on 6-month T-bills by 150 bps and announced an outright 6-month OMO, clearly indicating the intention of SBP to suck up excess liquidity from the system. On W-o-W basis, the ISE Index managed to gain a few points.
Giving outlook for the future, analysts said the market would continue its pattern of negative consolidation during the coming week, as major corporate announcements have failed to lift the investor sentiment. While the results were positive, they proved inadequate for triggering a spark in the market mainly due to concerns over rising short-term interest rates, they said. The results season is over now, so analysts do not expect any major stock specific activity during the current week.
Analysts said that investors interest in the share business was fading by each session, reflected by the falling daily volumes, as everyone has been awaiting how the things would settle down at the SECP level. The KSE managing director was already holding talks with the SECP in Islamabad on the changes in the forward trading and the possible investor reaction to them. Some of the leading stocks, notably Pakistan Petroleum, Pakistan Oilfields, Sui Northern Gas, and MCB came in for active short-covering and boosted the ISE Network index but later selling in them again pushed it down.
They pointed out that the major reason behind the range-bound movement of the index, despite positive corporate earnings, was the increasing interest rates and April contract maturity. Since the corporate sector profitability announcements were in line or above expectations, the market got some boost. However, the index movement was halted on many occasions due to many reasons having negative implications on the market.
Analysts said that the corporate watchdog has taken many steps to support the stock market. These include issuance of notice by KSE on April 21 regarding futures trading rules, formation of committee by State Bank of Pakistan (SBP) for margin financing and issuance of notice about badla extension by Securities and Exchange Commission of Pakistan (SECP).
But, uncertainly prevailed among the genuine and retail investors pertaining to futures contracts which resulted in the range-bound movement of the ISE index, they added.
On Monday, ISE Network Index was down by 66.24 points from 12,268.68 to 12,202.44 points.
The overall turnover amounted to 14,77,00 shares as compared to previous volume of 28,52,100 shares. Total 125 companies participated in buying and selling activity. Majority of stocks (84) closed in negative territory, 41 showed positive signs while no company remained pegged to its previous level.
On Tuesday, the market witnessed technical correction due to oversold position in all leading stocks. The market went down in the first trading hour, but later recovered due to the announcement of bonus by Fauji Fertiliser. The news of dividends by different companies supported the market and moved the entire ready board in upward direction. However, the investors remained cautious while injecting investment in the market. ISE Network Index showed substantial gains during the entire trading session. Total 120 companies participated in buying and selling activity. Majority of stocks (80) closed in positive territory, 40 showed negative signs.
On Wednesday, ISE Network Index was plus by 112.22 points to 12,421.97 points. The overall turnover amounted to 26,32,000 shares as compared to previous volume of 18,57,200 shares. Total 127 companies participated in buying and selling activity. Majority of stocks (71) closed in positive territory, and 56 showed negative signs.
Equities showed gains following support by the energy shares. The market appeared to be settling down after last couple of weeks' uncertainty. OGDC, PSO, NBP, Pakistan Petroleum and Pakistan Oilfields again led the market advance on active short-covering at the lower levels. Some brokers had reservations about the margin financing in place of COT and allied technical implications as they generally play safe and mostly on risk-free counters.
On Thursday, ISE Network Index showed a decrease of 113.66 points from 12,421.97 to 12,308.31 points. The overall turnover amounted to 10,14,700 shares as compared to previous volume of 26,32,000 shares. The horizon of trade expanded from 127 stocks to 133 companies. Majority of stocks (91) closed in negative territory, and 42 showed plus signs.
On Friday, ISE Network Index showed an improvement of 94.48 points from 12,213.83 to 12,308 31 points. The overall turnover amounted to 13,355,00 shares as compared to previous volume of 10,14,700 shares. Total 116 companies participated in buying and selling activity. Majority of stocks (83) closed in positive territory, and 33 showed negative signs.
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