The Lahore stock market recorded 4.3 percent increase amid mixed sentiments while the LSE-25 index gained 135.20 points to close at 3292.99 against 3157.20 of the last week. However, the transaction volume squeezed to 38.979 million shares as compared to previous week's volume of 42.207 million shares.
The resolutions passed by the provincial assemblies, seeking vote of confidence from President Pervez Musharraf and the coalition partners' preparation of framing charges to impeach the President kept the market under pressure during most of the trading days of the week under review.
Of four trading days of the week, the market showed recovery on first and last day while it failed to sustain during two trading sessions on Tuesday and Wednesday. The market on Monday managed a gain of over 102 points with ascending transaction volume of 14,274,900 shares because of aggressive buying in selective scrips. The MCB Bank, National Bank, United Bank, NIB Bank, Bank Alfalah, and the oil and energy sector shares; Attock Refinery, PSO, OGDC, PPL and Mari Gas in addition to Adamjee Insurance, and Engro Chemical attracted aggressive buying. A number of banking and oil sectors' shares had to face upper cap because of the rapid increase in their value that kept the market into green zone during the day's trading.
The market rise was attributed to the potential investors and the institutions that stayed on buying course to make fresh entries. In addition to the global trend, the maintenance of Pakistan rating at 'B' by the Moody's Investors Service remained the source of encouragement for the investors. The rebound in the oil prices at the international market helped the oil sector's improvement in the local bourses, the experts opined.
However, the market could not sustain and shed 98.55 points with low trading activity on Tuesday and thus lost momentum it gained on the first day. The selling pressure on account of profit-taking was the main factor that dragged the market into red zone. The investors, keeping in view the prevailing uncertain political situation, preferred offloading their holdings and booked the available margin.
The investors were scared of the political scenario. They believed that either the President can succumb to impeachment by the coalition government or he might use powers under section 58(2)b to dissolve the assemblies and both the actions were considered as negative by the investors, the experts said, adding that because of this fear, the small investors did not take positions and stayed away.
On Wednesday, the market remained under the grip of depressed sentiments that forced the market closure in red zone amid panic selling. Though, the index was marginally declined, the increasing volume reflected lack of interest on the part of investors, who continued getting out of the market to avert more declines.
One of the major factors that could be instrumental in market recovery in future is yearly June ending and the second quarters' financial result of the corporate sector. The experts foresee consolidation of about 2000 points at the present level and termed present period as best time for the investors to enter the market. The buying at the present level can yield a good amount of margin to the investors, the experts opined.
There were four trading sessions during the week under review because of the holiday on account of Independence Day. When market opened on Friday, the short covering by the investors pushed the index up by over 150 points. The oil and banking sectors performed well to lead the market upward on the last trading day of the week under review. The experts attributed the bearish rally to financial reports released by the companies during the week.
The market pundits in their opinion consider the next week very crucial for the stock market as well as the country. According to them, the political situation would commence moving towards normalisation, if the President resigns during next week as reported in national and international press.
They were of the view that the political uncertainty should not continue further because in its consequence, the stock business and the local currency remained under severe pressure. As soon as the political issues were settled, not only the stock market, but also the rupee would start improving and regaining strength, the experts said.
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