The market behaviour, from sideways movement to bearish, was due to the bomb blast. The weak holders liquidated their positions. Some analysts forecast that index movement in the following weeks may remain range bound, between 1800-1900. Others forecast that index may cross 1900 level at the back of renewed interest in PSO, PTCL, Fauji Fertilizer and Engro.

All COT indicators continued their declining trend. Average COT rate during the week dwindled to 8.4 per cent compared to 9.6 per cent for the previous week. Average COT investment fell by 9.5 per cent to slightly more than Rs 5 billion due to fall in COT volume as well as bearish sentiments leading to decline in equities value. HUBCO accounted for the largest investment followed by PSO and PTCL.

The EoGM has been now scheduled for May 27, 2002 to consider an increase in authorized capital, conversion of the GoP and GoP guaranteed loans of over Rs 65 billion into equity and reduction of capital of the company to the extent of Rs 6.5 billion on (each) issued share and reducing the nominal value of share to Rs 3.50. According to a KASB report, an addition of Rs 65.3 billion of the GoP loans into the current capital of Rs 22.66 billion raises the total paid-up capital to Rs 88 billion. When this amount is adjusted for capital and revenue reserves and accumulated losses, the net equity of the utility comes to around Rs 33.3 billion. The conversion of all the loans into equity would result in a sharp reduction in financial charges. However, unless operational losses are curtailed it will not be really beneficial. Investors are still skeptical of any turnaround in the presence of very high T&D losses.

The Jan-March quarter results indicates significant improvement over performance during corresponding period of last year. Profit before tax improved from Rs 20.4 million to Rs 53.8 million. While sales increased, a tighter control on cost of sales improved the gross profit from Rs 149 million to about Rs 214 million. There was increase in other income but the benefit was eroded due to increase in other charges. Looking forward the most important feature was that accumulated losses as at March 31, 2001 transformed into Rs 36 million profit carried forward.

The nine-month results reflected an improvement but was below the forecast of equities analysts. The full year profit is expected to wipe out the losses. Analysts forecast for a 40 per cent dividend payout for the year, a dividend yield of around 14 per cent. Though, the company managed to attain sales at par with the previous year, the margins improved. The company also managed to contain its selling, general and administrative expenses. Financial charges were also in the decent range. With the increase in offtake of cement, sales are expected to improve. The other factor adding to profit margin is lower prices of paper in the international markets.

An analysis of the nine-month results indicate nearly double the profit as compared to the corresponding period of last year. As a result, profit before tax improved from Rs 14.6 million to Rs 27.9 million. The profit has been driven by increase in export sales, increasing from Rs 502 million to Rs 783 million. However, there was increase in operating expenses and other charges.

The company has witnessed a complete reversal of fortune during the year ending September 30, 2001. For the year the company has posted Rs 79 million loss before tax, compared to a profit of about Rs 4 million. Sales went up from Rs 676 million to Rs 708 million but increase in cost of goods sold eroded the benefit and company ended up with an operating loss of Rs 0.417 million as compared to an operating profit of Rs 34.67 million for the previous year. While the company managed to curtail financial charges, provision of Rs 32.7 million against diminution value of investment added to loss. As a result of this, accumulated loss jumped from Rs 290 million to Rs 373 million.

PSO's privatization is currently in full swing with expectations of its completion by September this year. Apart from privatization upside, the company has shown healthy earnings announcement. As the fundamentals of the company continue to become stronger, the scrip may witness large scale investment by the speculators, pushing the price further up. It seems that after PTCL lost the attention of speculators, PSO has become their favourite.

The company, enjoying the largest share in fertilizer market, seems to have gained further strength after winning the bid for Pak Saudi Fertilizer. The other advantage is that the company sells its products mainly in Punjab which faces lesser shortage of water, fertilizer offtake is also dependent on water availability.