The share market during last week ended on June 18, 2005, moved in a narrow-band as investors received rumours related to delay in PTCL privatisation, forcing them to sit on the sidelines waiting for the right moment to enter the market. However, KSE Index increased by 0.7 percent, to 7398 points, with market capitalisation reaching $34.5 billion. The overall leveraged position (futures and badla) at KSE has declined by Rs 2.0 billion on weekly basis, from Rs 27.3 billion, to Rs 25.4 billion on Friday Interestingly, while looking at KSE-100 Index movement in the last 9 weeks, it has been observed that the Index had crossed 7400 level six times (two being this week only) but failed to sustain above this level. This shows that the Index is facing tough resistance above the 7400-point level.
Effects of badla phase-out were also visible as badla value and volume declined substantially during the week. However, some shifting was observed to futures market as open interest increased by Rs 1.4 billion, to Rs 8.2 billion.
The new bidding date for PTCL privatisation, announced on previous weekend, kept speculators and punters active during the whole week. However, due to continuous flow of mixed news regarding PTCL privatisation the market remained directionless. PTCL workers' unions' demand to end PTCL privatisation, and opposition leaders stating PTCL privatisation as an unfair event, were main concerns of the market. Furthermore, petitions filed in Sindh and Lahore High Court against PTCL sale also created uncertainty amongst market men.
Despite positive developments on the privatisation front, PTCL stock witnessed selling pressure during the week. Speculators, who bought huge amounts of PTCL through badla were seen selling in the market as they believed that privatisation hype was coming to an end.
An analyst from Atlas Investment Bank said that the market remained quite volatile during the week which could be gauged from the fact that the index touched the week's highest and lowest at 7535 and 7301, respectively, and finally settled on 7398.73 points on Friday. Companies, which have either passed the privatisation phase or are in due course, remained in the lime light during the week.
Going forward, the extension of credit facility by major banks for margin financing would lead to increase in volumes. However, news, whether positive or negative with regard to the privatisation of PTCL on Saturday, June 18, and its actual bid price was expected to be the key factor for setting the direction of the market in the short run. "We also expect that this will be a major determinant of a longer-run interest by investors in other scrips which are anticipated to be privatised."
An analyst from KASB Equities said that PTCL privatisation was expected to be the key driver for market direction. "Monday is likely to mark the beginning of a new era for PTCL post-privatisation era. The outcome of the bidding process would have a major impact on PTCL and, given the market moving status of PTCL in the past few weeks, externalities should flow through to other stocks. An overtly positive surprise in terms of bid price should bode well for the stock and the market in the near term whereas bid price in line with or lower than expectations should see the stock and the market shed some weight. From a fundamental perspective though, we continue to recommend Callmate, Fauji Fertiliser bin Qasim, Fauji Fertiliser, Pakistan Oilfields and Packages as BUY."
Pakistan Telecommunication Company Limited (PTCL) declined by Rs 2.05, or 2.9 percent, during the week from Rs 69.35 to Rs 67.30. Share value of Oil and Gas Development Company Limited (OGDC) lost 10 paisa, or 0.09 percent, to reach Rs 103.65 from Rs 103.75. National Bank of Pakistan (NBP) increased by 10 paisa, or 0.09 percent, to close the week at Rs 101.10 compared to its price of Rs 101.00 on last weekend, and Dera Gazi Khan Cement declined by 2.6 percent, or Rs 1.50, to close at Rs 55.35 from Rs 56.85.
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