THE share market last week failed to sustain the mid-week rally boosted by positive developments on the corporate and political fronts, and after late selling amid concerns over political uncertainty closed with clipped gains.

An idea of mid-week rally may well be have from the fact that the KSE 100-share index surged to a high of 14,593, but closed on the lower side as leading base shares actively un-loaded in the absence of foreign support.

However, on the balance, the market improved after having received massive battering for the last three consecutive weeks as both technical factors and some positive developments on the political front triggered a good bit of short-covering at the lower levels.

The KSE 100-share index though failed to sustain its peak levels owing to subsequent negative news, mainly downgrading of Pakistan currency rating by the Standard and Poor’s (S&P) after steep decline in the value of rupee against US dollar, managed to finish with a modest gain of 4.22 points at 14,232.89 as against previous week’s 14,229 points.

The 30-share free float index, on the other hand, showed a good gain at 16,882.59 points as compared with the previous 16,768.16 points as some leading base shares managed to hold on to early gains.

The market, however, received a jolt after a coalition partner withdrew from the government and its ministers tendered their resignations on the issue of reinstatement of judges within the stipulated time.

However, the financial front gained strength after a new team of economic managers under the leadership of Naveed Qamar took the charge, the underlying sentiment improved and the index showed a sustained rise.

After a terribly weak opening on panic selling after the failure of London talks between the PPP and the PML-N on the issue of reinstatement of judges, the KSE 100-share index had managed to finish modestly higher on late short-covering in most of the low-priced banking, oil and cement shares.

The recovery was largely initiated by leading shares of MCB and Nishat Mills, Arif Habib Securities and other leading oil shares, which, analysts said, had already touched their lower levels and came in for technical support.

Earlier in the week, widespread panic was witnessed in the trading hall fearing collapse of the coalition government at the centre and its impact on the economy, foreign investment and bourses which triggered nervous selling from all and sundry.

After having fallen by about 1,500 points or nine per cent during the last couple of sessions on persistent selling, the KSE 100-share index opened 206 points off from the weekend close, and by the mid-week witnessed the return of the bulls at the lower levels pushing the index to close modestly higher, said a stock analyst Hasnain Asghar Ali.

“But the near-term political outlook is still uncertain as future line of action of the PML-N whether or not to stay in the coalition will be a crucial factor for a falling market,” he added.

Another analyst Ahsan Mehanti says the market seems to have already enough of the political manoeuvring and bulls may have decided to go alone ignoring the battle of wits.

“The market is now in a terribly oversold position on most of the blue chip counters and indications are that it may creep to its pre-reaction level in due course”, analyst Faisal A. Rajabali predicts. “There are other consolidation forces which hate fresh market fall”.

No one could deny the fact that most of the economic indicators including political at this time are bearish but the market’s in-built mechanism to meet such situations is still there and appears to be at work with the start of the new week, he added.

The broader market was still weak, but not to the extent it had been during last weeks. The revival of active short covering in most of the pivotal having potential to rise could sustain the technical rally during the coming sessions also.

Forward counter: Barring the National Bank and some other leading shares, MCB, D.G. Khan Cement, Nishat Mills, Engro Chemical managed to finish modestly higher and most of the mid-week gains were sustained by them.

— Muhammad Aslam.