These are torturous times for a KSE investor. Not knowing how to react to the spate of political and business headlines, the market has been caught between a rock and a hard place.
At one end, the dicey Pak-US relationship amid increasing voices on the role and fate of army - which has long been known to have significant influence on domestic politics - is keeping participants hesitant.
At the other, doubts over the governments management of fiscal deficit (as well as FBRs ability to expand the tax net) and the future of foreign inflows if the IMF and the US remain unhappy are some economic factors responsible for creating uncertainty.
Add to that mix, the governments phlegmatic response to the demands of stock market participants that the procedure of collecting capital gains tax - which they say "is the single biggest thing hurting market activity" - be amended to ensure that its not "cumbersome for the average investor".
So there you have it, a perfect drug for producing anxiety - one that has been squeezing volumes from the market.
Trading volumes that have been characteristically low in FY11 dropped even further last week - averaging just 30 million a day (its lowest since the trading week ending Sep-9, 2011) as against 104 million in the week before.
The quality of volumes isn impressive either - considering that small-cap stocks - often called kachra at the bourse - have been dominating the trading screen, which means that brokers aren making much.
What it also means, however, is that prices are likely to fall soon given that the rise of kachra is traditionally seen as a sign of correction. Besides, one can have a rising market with falling volumes for long. Sooner or later, either the momentum must buck up the rally or, the prices must taper off.
In absence of strong foreign inflows and uncertain minds at home, the latter seems more likely - with possibility that a broad range of 11,700-12,300 will be maintained over the next few months.
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