The KSE-100 Index fell this week to close at 1382 on Thursday — the last day of the week due to a national holiday on Friday and the ADV during the week slipped by 45.43% from 190.90mn to 104.17mn shares. The most active scrips during the week were PTCL, Hubco, Sui-North, PSO and ICI — contributing 85% of the total market volume (ADV of Hubco and PTCL alone accounted for over 63% of the market ADV).

The Annual General Meetings (AGM) of the two major blue chip companies — Hubco and PTCL — were held, coincidentally, during the current week which pinpointed the market interest on mainly these two large cap stocks. Hubco, with its AGM on the first day of the week, was rumored heavily in the market of announcing a PkR5.50-6.0 per share total dividend but declared a total dividend of PkR3.9 per share for FY01. This dampened the exaggerated market expectations and the KSE-100 came under selling pressure and slipped 39 points down to close at 1360 on Monday.

This weakness continued next day also and took the market down further 20 points to close at 1340. Apart from Hubco, major decline was witnessed in PSO, Adamjee, ICI, Nishat and MCB, which crashed by almost 9% on average until Tuesday from Friday's closings. Eventually, the emergence of some institutional buying rescued and stabilized the falling market.

On Wednesday, the mood of the market changed in the anticipation of PTCL's board meeting on Thursday and gained 13 points to close at 1353.78. PTCL announced a net profit of PkR18bn — much to the surprise of market expectations of a net profit of PkR15-16bn for FY01 and also declared a dividend of PkR2.40 per share. This resulted in a sharp reversal of the market sentiments, which rallied the market up by 29 points — closing finally at 1382 level on Thursday for the week.

The SBP slashed the fixed coupon rates by 1.2% on long term Pakistan Investment Bonds in a follow-up of the cut of 200bps in its discount rate on Wednesday. The easing off of the monetary policy would lead to readjustment in lending rates and is likely to bring liquidity in the money market from several financial institutions. The inflow of funds is likely to be absorbed by the badla market and should result in excess liquidity available to the market players at lower cost. In view of the above development, we expect the market trend to remain generally positive going forward.

Technically, as we have already mentioned in our previous weekly, the market has corrected itself completely after a gain of 350 points and is likely pick-up on positive trend. In the near term, we expect KSE-100 Index to test its strong resistance at 1425 where profit taking can be witnessed while, on the other hand, the support of 1350 is important. In our opinion, the market is likely to be lead by PTCL, Sui-North, MCB, Nishat and — after a little weakness — Hubco. We maintain our cautious stance for PSO and DSFL.