The Lahore share market the past week gained 2.49 percent raise despite negative factors concerning controversy over the bourses crash in 2005, as low price levels and optimism of corporate results season encouraged institutional buyers to pick select stocks.
The week commenced on a negative note and the market underwent massive battering, amid allegations and counter-allegations levelled by a former chief of the Securities and Exchange Commission of Pakistan (SECP), Dr Tariq Hassan, and high profiled government figures against each other for the March, 2005 market crash.
However, from second day, the market started recovering gradually on account of such factors as low price levels, increase in crude oil price in the international market and, above all, President Musharraf's statement on a private TV channel ruling out the possibility of Prime Minister's involvement in the market crisis. The recovery that started under the lead of oil and gas sector and banks continued till the last day of the week, analysts said, who also forecast continuation of the rally in view of the rising hopes of investors about the corporate results for June closings. The LSE-25 index made a net gain of 107.39 points, rising to 4,406.28 points from 4,298.89.
The volume, however, was slightly low and was marked at 38.728 million shares from previous 40.536 million shares, depicting a decline of 1.806 million shares.
On the first day of the week, the market painted a very dismal picture and nose-dived, losing heavily following rising worries of the players after allegations levelled by ex-SECP chief Dr Tariq Hassan against brokers and those having high positions in the power corridors, holding them responsible for bourses crash.
The LSE-25 index retreated to 4,104.99 points from 4,298.89, registering a fall of 193.90 points. Volume plunged to 26.975 million shares from 40.536 million, showing a decline of 13.561 million. Led by key banking stocks and petroleum shares, the market mostly stayed in red zone on that day as dark shadows caused by submissions of Dr Tariq Hassan, in the National Assembly's Standing Committee on Finance and Revenue, marred activity in the market.
The uncertainty and panic triggered by Dr Hassan's statement and ongoing SECP inquiries against brokers also overshadowed the impact of record cash dividend declared by NIT and even the banks having major stake in NIT suffered massively. However, later the market started stabilising on buying interest in petroleum sector, banks and some cement stocks which helped bulls to continue occupying the driving seats till end of the week.
Analysts said that the President's statement, in which he defended the Prime Minister and held Dr Tariq Hassan responsible for the whole episode, was a message for economic managers and the brokers that they were innocent and had nothing to do with what deprived the poor small investors of their hard-earned money in March 2005.
Although inquires against big brokers for the recent market crisis are under way, they feel relaxed due to shift of all blame to Dr Tariq Hassan for the 2005 crisis, an analyst commented. It seems that Dr Hassan will be made the only scapegoat and will be held accountable for all that pushed the market to crisis last year, he added.
There are also reports that the government has initiated an inquiry against Dr Hassan which has also relieved the brokers, especially those whose names were mentioned in the white paper submitted by Dr Hassan before the Standing Committee meeting. Now the market is solely depending on the corporate results for the June closing and as such there is no other positive factor, another analyst said. Moreover the market is oversold and the current levels will surely lure investors, especially the institutional buyers, he added. But law and order situation and the Indian allegations against Pakistan for Mumbai train blasts are bad signs and could send negative vibes in the market, he added.
The given situation is not favourable for small investors and traders. Therefore, they have been advised to stay at a distance. However, investors could go for genuine investment, he observed. According to experts, for a sustainable development the market needs active support from the institutional side but institutions may not take risk if some negative change takes place in the scenario regarding Pakistan and India relations. The reports regarding Indian announcement to postpone CBM talks with Pakistan have also raised investors' concerns, which could discourage foreign investor, who is already afraid of the law and order situation within the country.
Comments
Comments are closed.