THE stock market last week further extended the creeping rally as investors continued to build-up long positions at the attractively lower levels under the lead of strong fund and institutional buying amid an air of optimism about a bullish outlook during the New Year.

At last the Rubicon has been crossed after having fallen by about 60 per cent, but it is a long journey and how the investors will tailor it according to their needs will be known during the next couple of weeks.

“It is a long journey for a massively mauled market still operating amid many ifs and buts”, said a leading analyst Faisal A. Rajabali and added “but a thousand mile journey begins with the first step”.

The KSE 100-share index recovered another 350.24 points at 6,143.81 points adding Rs108 billion to the market capital at Rs1,936.136 billion. Its junior partner also rose by 437.39 points at 5,778.61 points.

Opinions are divided about its future direction after the current euphoria created by the launching of the Rs20 billion state enterprise fund fades, he said adding “weak economy, tension with India on the Mumbai issue, may continue to haunt investors in the coming sessions too”.

The interesting feature of the shortened week was that most of the leading base, shares, which had dropped to all time lows during the recent recession had assumed the role of market trend setter amid strong support followed by smart price recoveries.

But the market has still to go a long way to pull itself out of the protracted bearish spell, which has shaken its very foundation. Both the benchmark KSE 100-share index and the market capital had fallen by 10,000 points at 6,074.87 points and Rs1,515 billion during the last six months.

It (market) is still on the crossroad of a great divide as leading base shares, notably Rafhan Maize, Nestle Pakistan, Adamjee Insurance and Pakistan Services remained one of the major losers, while some others, notably OGDC, Pakistan Petroleum, Pakistan Oilfields, PSO, Attock Petroleum, Hub Power and PTCL have assumed the role of future market trend setters.

“It will stay on the slippery path until all of them join hands to consolidate the initial rally on the strength of the current lower levels, which ensure a massive capital gains in the given situation”, said a leading analyst Asrahf Zakaria.

He said any easing in the prevailing tension with India on the Mumbai attack issue would add significantly to the market recovery amid revival of New Year short-covering.

“Both the attractively lower levels and the fund’s operational activity would play a decisive role in pulling the market out of the prevailing impasse”, said a leading analyst Ahsan Mehanti,” but hoped an attractive bait of capital gains may not be that easy to ignore at this stage”.

But some others said the future market trend would essentially be guided by attitude of foreign investors. If they continued to unload long positions on the blue chips in the coming weeks also, the current rally would falter half way and if they opted for restrain, the current

recovery tempo would be

sustained.

They linked the extension of weekend rally to strong short-covering in the leading public sector scrips, which form the basis of recently floated state Enterprise Fund, while blue chips on other counters remained under pressure under the lead of PSO, MCB and several others.

Mutual Funds, bank, modarabas and leading shares on other counters led the market advance, leading gainers among them, being Habib Bank, New Jubilee Insurance, Mari Gas, Pakistan Petroleum, Millat Tractors, BOC Pakistan, Glaxo-SKF. Abbott Lab, Engro Chemical, Packages and Unilever Pakistan posted fresh gains ranging from Rs3.42 to 85.

Leading losers were Rafhan Maize, Nestle Pakistan, Al-Ghazi Tractors, Shell Pakistan, Dawood Hercules, and Pakistan Services, which suffered fall. The largest decline of Rs107.46 and Rs53 was noted in Rafhan Maize and Siemens Pakistan which is under pressure for the last couple of sessions and had fallen sharply lower on some negative news about the earnings for the last year.

MCB, EFU General, EFU Life, Pakistan Tobacco, PSO, PECO, Clariant Pakistan and some others also fell.

Forward counter: Speculative issues on the forward counter failed to recovery in the ready section and fell further across the board under the lead of leading among them and ended on-balance on the lower side despite active recovery staged by them in the ready section. — Muhammad Aslam