Investors return to the market

THE capital market last week turned impressive as both local and foreign investors resumed normal activity after some positive developments on the financial front, mainly the status quo maintained by the State Bank in the policy discount rate at 14 per cent. But the euphoria created by the cricket semi-final between the traditional rivals Pakistan and India on March 30 appeared to be the chief factor behind the market surge on market talk, pointing to Pakistan's win. The benchmark maintained its winning streak on active follow-up support at lower levels, although a dominating role was played by strong presence of foreign support on oil and fertiliser sectors. It finally ended with previous losses fully recouped and was last quoted at 11,885.64, up 333.51 points as compared to 11,552.13 a week earlier, reflecting strong recovery staged by the leading base shares, notably OGDC, Pakistan Oilfields, National Refinery, Attock Petroleum, Fauji Fertiliser and Engro Corporation. Analyst Ahsan Mehanti said the current recovery is expected to be sustained during the next couple of weeks on the strength of interim earning by the corporate sector in the quarter ended on March 31. Initial reports pouring in the market indicated that leading shares, mainly in oil and fertiliser sectors were among top earners and may come out with higher interims, he added. Another analyst Hasnain Asghar Ali held the same view but hoped that an efficient use of leverage facility is gaining strength and could play a stabilising role in coming weeks. Opinions are, however, divided on the snap rally. Some say the cricket diplomacy in the backdrop of prime minister's Mohali visit may have role in it. But others claim the leverage product is at work. Analysts said the semi-final between Pakistan and India might have generated much of the heat aided by expert comments on the winning side but many might not deny the positive fall-out of the visit, mainly after the two prime ministers met on the cricket ground. But the outcome of the match would certainly have bearings on the prevailing euphoria here and across the border. The current buoyancy on the cement sector about lifting of ban on exports to India after the prime minister's visit, still appears a far cry, they added. Most analysts believed investors had at last opted for the leverage facility though a bit late after having analysed its merits and demerits. "Larger volume of well over 110m shares reflects that some leading investors have efficiently used the leverage facility on selected counters," they said and hoped that its areas of activity were to be expanded in due course. The role of leverage financing was expected to further expand with the arrival of results of earning for the quarter ending March 31, 2011 as investors would like to build-up long positions on those counters where the earning reports were on the higher side, they added. Forward counter: Large volumes in Fauji Fertiliser Bin Qasim and some other leading shares featured the trading on the cleared list whereas, Engro Corporation, Pakistan Oilfields, Fauji Fertiliser and some others performed credibly on active support. But cement shares, such as Lucky Cement and D.G. Khan Cement, finally reacted from the mid-week highs attained on market talk that the banned cement export to India might be resumed after prime minister's Mohali visit and his talks with the Indian prime minister. Engro Corporation and Pakistan oilfields also ended with clipped gains on weekend selling.—Muhammad Aslam