Much still between KSEs ebbs and flows

For the past few weeks, it appears the investors are celebrating KSEs first anniversary of the price-floor removed on December 15 last year. Although both volume and the benchmark index ticked a bit higher in the last three sessions, average turnover is still at multi-month lows, with share prices turned nearly flat since November. Its as if the noose is getting tighter by the day.
Average difference between day-highs and day-lows is sliding, along with the declining volumes that averaged 66 million last week, compared with an average of 69 million in the week before and 103 million in November.
Participation in blue-chip stocks also seems to be fading with the volume ratio of KSE-30 to KSE-100 easing to 64 percent last week compared with an average of roughly 80 percent last month. The tide, however, according to some market participants, might change in the sessions to come.
What had kept the investors jittery so far is the bundle of negative developments including the political noise over NRO, absence of non-IMF foreign inflows, the pause in monetary softening and the persistence of terrorist attacks despite the talks of success in military operation. But the authorization of $1.5 billion annual non-military aid by the US House of Representatives and the endorsement of $1.6 billion for Pakistan under the Coalition Support Fund for next fiscal year by the US Congress have reduced some concerns regarding the lack of foreign inflows.
Likewise, the kind of consensus building politicians showed on the NFC award over the weekend has created hopes in certain quarters of the bourse that the NRO issue would soon be over, adding that much of the NRO related blues have already been priced-in.Yet, while these seemingly pre-mature (and possibly wrongly-formed) perceptions, may help prop share values at the exchange this week, two thorny issues still loom ahead.
One; is the randomly occurring bomb blasts and attacks that seem to target security installations one by one like a pack of hyenas. And two; is up tick in November CPI numbers that surprised many across the board - breeding views that yields on benchmark PIB would steady further. After sliding to its recent low of 10.29 percent on November 13, the secondary market yield on 10-year government paper has increased by 51 basis points since then.
And there are expectations that yields would jack up another 15 to 20 bps by the end of this year given the more-than-forecast jump in CPI - unless of course, the soon-to-be-launched National Saving Bonds creates enough demand to lower the yields. One gets a feeling the battle is far from over.