Stocks finished the week on an improved note for the second week in a row, although the presence of some psychological depressants did not allow the consolidation market forces to play their due role in the backdrop of the second instalment of the SECP reform agenda.

Although, the atmosphere in the corridors of the KSE was tense, its high-ups opted for a negotiated settlement rather than a defiance. All eyes, therefore, remained focused on the next Monday’s meeting between the top brass of the KSE and the SECP.

“Whether or not investors will pierce through the fallout of the SECP reform agenda, seeking to convert the KSE into a corporate company, will determine the future price outlook”, one leading broker said.

But some others said, though temporarily a standoff may be there as both contenders are expected to demonstrate their respective strength after having taken rigid stand on the reform issue.

Despite a mid-week interruption in the sustained run-up, the Karachi stocks managed to finish steady but the leading analysts predict a near-term pause in the backdrop of fresh regulatory steps by the Securities and Exchange Commission of Pakistan (SECP) and the impending tussle between the brokers and the apex body.

“The SECP came out with a reform agenda when the market was bracing for a big bull-run”, they say, “a bit delay must have changed the entire developing financial scenario”.

“It is a clear official intervention in the affairs of bourses and could have a negative impact on the stock trading as it did when the first instalment of the reform agenda was announced last year by the SECP”, fears a leading broker.

The current steps seek equal number of directors on the board of bourse, both from the broker members and the private sector and the election of the chairman from the four non-members.

Brokers may oppose fresh rules, which challenge their over five-decades’ of authority in the affairs of the stock exchanges by staying away and the consequent low volumes and falling prices as they did last year against the similar steps, some analysts say.

As a result, the KSE 100-share index reacted to finish around 1,843.26 points from the week’s peak level of 1,856 after the daily volume figure soared to a recent peak level of 185 million shares, about a half of which went to the credit of the Hub-Power followed by the market talk of 40 per cent final dividend in addition to an interim of 70 per cent already paid. The market capitalization rose to Rs429.009 billion from the previous Rs422.978 billion, showing an increase of Rs6.0316 billion, as mega issues such as the PTCL, the Hub-Power, the PSO and the ICI Pakistan finished higher.

“As one goes by the performance of the Hub-Power, the bulk of share business in it goes to the credit of foreign buyers and it is a good omen”, says an analyst, “if that is true the market is now on the cross-road of writing a new chapter in its trading history”.

“It may not be the return of the prodigal son but a genuine event guided by the unfolding financial and political scenario including the strong physical presence of the US here”, says another.

Adamjee Insurance again burst into activity on hostile takeover talk and breached through its circuit breaker at Rs43.10 on strong speculative activity.

The board meeting of some of the leading MNCs, including the Shell Pakistan (on Aug 20), and the Hub-Power next month may not allow investors to lay their guards. A long spell of sluggishness has broaden their vision about the future share market outlook and the current lower levels are providing them an attractive bait.

The privatization of the ICP Mutual Funds and the oil giant PSO and the Telcom volume leader, the PTCL may not be possible during the current or the next month as officially stated but it certainly is on the agenda of the existing government.

“The next political government is expected to be in place after the October 10 elections, “says a broker, “how it views the privatization scenario will take sometime”.

But most analysts believe the new government may not go all-out to sell all the state-owned units but will think twice before going for the PSO or the PTCL despite a massive offering.

However, a loud whispering about their sell-off keeps the market in a good shape and that is not a bad idea to generate speculative activity, they added.

“Essentially, the current rally is dividend-driven and the lower levels of most of the blue chips have made it more convincing and how the market behaves after September, or in the pre-election sessions, will demonstrate its relative strength”, says a leading stock broker.

The big gainers were led by the Adamjee Insurance, which breached through its upward daily ceiling rate, Anwar Textiles, the PSO, the Lever Brothers and the Nestle MilkPak, followed by the Treet Corporation, the Pakistan Refinery, Hilal Flour Mills, the Attock Refinery, the Clover Pakistan, and the Kohinoor Weaving and many others.

Losers were led by some of the blue chips, notably the Pakistan Tobacco, the Abbott Lab, Mehmood Textiles, Al-Qaim Textiles, Shafiq Textiles, Johnson and Philips, off Re1 to Rs1.90, Wyeth Pakistan, being the leader.

The trading volume rose to 550 million shares after several weeks, thanks to the massive activities in some current favourites, notably the Hub-Power, the PTCL and the PSO ahead of their board meetings. The previous total was modest at 163 million shares.

Other actives were led by the Sui Northern, the National Bank, the MCB, Adamjee Insurance, the ICI Pakistan, Fauji Fertiliser, the Engro Chemical, the WorldCall Payphones, the ICP SEMF, the FFC-Jordan Fertilser, the D.G.Khan Cement and several others.—Muhammad Aslam