Share values depreciated on the Lahore Stock Exchange (LSE) during the week ended on April 26 2008, chiefly because of the prevailing political unrest, futures settlement problems and reports about re-opening investigations into March 2005 stocks crisis.
The week opened on a negative note on account of selling pressure in prime sectors, but on the last day the market showed gains since equities rose on good earning reports of some key scrips. Brokers attributed reports regarding differences between PPPP and PML-N leadership over the issue of the restoration of judges to the selling pressure, which continued gripping the market during the week under review.
The LSE-25 Index, with a loss of 83.42 points or 1.7 percent, dipped to 4,767.13 from 4,850.55 points. Turnover declined to 20.635 million shares from 24.418 million shares, decreasing by 3.783 million shares or 15 percent. Political uncertainty kept investors away from the market, which resulted in decline in volumes.
Brokers also reported fall in SCRA which, they said, indicated foreign investors' lack of interest in the market. "From foreign investors' point of view, our market is very attractive in terms of yields, but they are reluctant to make big deals in view of then volatile political situation," a broker said. As soon as major political issues, including the restoration of judiciary, are resolved, foreign will go for buying in a big way, he added.
Mixed sentiment prevailed on first day of the week and equities showed volatile movement as people awaited improvement in the political situation. The LSE-25 Index stayed at 4,814.33 points compared with previous 4,850.55, registering a decline of 36.22 points. Turnover lowered to 16.383 million shares from million 24.418 million, depicting a significant decrease of 8.035 million shares. There was range-bound activity in the market because people were not comfortable under the volatile political situation. Pakistan reinsurance continued its lead on the basis of its better than expected results while oil sector painted a dismal picture.
Bearish trend also gripped the market on the second day with equities posting losses amid lackluster trading. The LSE-25 Index declined by 42.82 points to 4,771.51 from 4,814.33 points. Selling pressure also marred activity on the third day because people continued pocketing profits that forced the market to end with an easy note. The LSE-25 Index, with a decline of 11.03 points, retreated to 4,760.48 from 4,771.51 points. Volume improved to 18.876 million shares from 16.726 million, depicting a decline of 2.149 million shares. The market opened above its past closing level and fared better for quite some time but fell prey to pressure when the first half of the session was in progress. Oil sector shares, especially PSO, moved in upward direction while Engro Chemical ended with its lower cap limit.
The share market extended the overnight losses as selling pressure intensified on second last day of the week under review, mainly because of political reasons and future settlement problems. The LSE-25 Index closed at 4,717.70 points as against 4,760.48, depicting a fresh fall of 42.78 points. Turnover was almost flat at 18.731 million shares compared with 18.876 million shares. Since there was no support from potential investors, the market remained mostly under pressure. Oil refineries, auto sector, and partially exploration companies scrips, resisted pressure while insurance sector, major banks and fertilisers registered declines. Share prices climbed on last trading day of the week following good buying in MCB Bank and some other key scrips.
The LSE-25 Index finished at 4,767.13 points versus 4,717.70, showing a rise of 49.43 points. Trade turnover slightly improved to 20.635 million shares from 18.731 million, increasing by 1.904 million shares. Though the market made substantial gains despite last day pressure, investors were not comfortable because of its roughness and high volatility. MCB led the proceedings while Central Insurance Company ranked top among day's prime losers.
The market was stable in terms of internal fundamentals, but people were reluctant to go for fresh deals because of political reasons, an expert said. In case PPP and PML-N failed to reach consensus to restore judiciary, in light of the Murree Declaration, the political scene could dramatically change, which will impact the market. Moreover, the news that the government had referred the issue of stock market crisis, surfacing in 2005, to the finance committee was also a matter of concern. Similarly, the government indication to re-audit previous privatisation transaction also sent negative vibes in the market, he said. "But smooth settlement of all the crucial political issues will generate buying interest in the market," he viewed.