THE KASB REVIEW

STOCK MARKET AT A GLANCE

 

 

By SHABBIR H. KAZMI
Updated Oct 12, 2002

 

MARKET REVIEW: ELECTION TURMOIL

Pre-election bullish sentiment and post election panic element controlled the market this week.

 

Prior to the elections, most of the traders were fairly bullish as no major upsets were expected in the elections. However, the results were contrary to all expectations. The religious parties won a sizable number of seats and the so-called 'king's party' did not perform as expected. The result: Panic settled in.

Other developments during the week were I) commencement of the undisclosed trading system which is expected to lead to greater transparency in the stock market; II) National Bank of Pakistan's second public offer of 5% ordinary shares with a green shoe option of an additional 5%; and III) the approval of PkR 8bn grant for KESC.

THIS WEEK'S PERFORMANCE

Throughout the week the market remained extremely bullish with regards to the general elections and the much anticipated post election rally. Consequently the KSE100 Index ('Index') rose from 2028 points at the end of the previous week to breach the 2100-point barrier on Wednesday. At this point in time, the general sentiment in the market was extremely upbeat with many analyst saying that if the elections go off smoothly, reaching 2300 points would not be that unachievable.

However, the results of the general elections were totally unexpected with the religious parties coming to the forefront. Consequently the sentiment throughout the last day of trading was extremely bearish. The Index declined considerably to end the weeks trading at 2037 points, reflecting a marginal increase of 0.44% over the last week.

Volumes throughout the week remained fairly high, with the average daily volume being 120mn shares as compared to 152mn shares during the previous week.

OUTLOOK FOR THE COMING WEEK

According to our expectations, the bearish sentiment reflected during the last day of trading is likely to continue in the coming week. We believe that the market is likely to remain considerably turbulent throughout the month until a new government sets in and takes control.

THE DAILY DRAMA

On Monday the new system of undisclosed trading commenced, and the market reacted favorably to the new system. It was generally believed that the new system would result in greater transparency in trading. The market was fairly bullish throughout the day and institutional support resulted in the Index rising by 19 points to close at 2047 points. Volumes averaged at 132mn shares with Hubco and PTCL topping the list.

Historically, there has often been an upward rally in the market post elections. The market expecting such a rally early next week remained bullish, with institutional buyers along with some foreign investors buying heavily. Consequently, the Index rose further on Tuesday by 20 points to close at 2067 points. Higher investor interest also resulted in the volumes increasing by 21% to 160mn shares. All key stocks reflected considerable gains especially those in the oil and gas and fertilizer sectors.

On the third day of trading, the market continued to be extremely bullish on the forthcoming elections and breached the psychological barrier of 2100 points, reaching a three-year high. However, profit selling at these levels resulted in clipped gains and the Index closed on Wednesday at 2099 points. Volumes increased further to 179mn shares with Hubco, PTCL and Engro topping the list.

The stock markets remained closed on Thursday on account of general elections.

On Friday, the market opened on an extremely bearish note. Contrary to the expectations, the so-called 'king's party' did not win a sizable number of seats in the elections. Instead, religious parties seemed to be on the forefront and as a consequence, panic settled into the market. The market took a 62 points dive to close at 2037 points. Volumes declined by 22% to 139mn shares.

MARKET ROUNDUP

..

LAST WEEK

THIS WEEK

% CHANGE

Mkt. Cap (US $ bn)

7.87

7.89

0.25

Total Turnover (mn shares)

600.29

610.43

0.42

Value Traded (US$ mn.)

648.03

398.88

-38.45

No. of Trading Sessions

5

4

 

Avg. Dly T/O (mn. Shares)

120.06

152.61

27.11

Avg. Dly T/O (US$ mn)

129.61

99.72

-23.06

KSE 100 Index

2028.39

2036.98

0.42

KSE All Shares Index

1264.51

1270.04

0.43

Source: KSE, MSCI, KASB