Though holidays for hacks like this writer are not as many as for folks in other, less crazy, kindlier vocations, but the short time-off on Eid was a reprieve in more ways than one, for it meant that there being no newspaper for two days, a break from this column too.
And when last Monday the market opened after a rather longish break, with only two work days sandwiched between eight days of pre- and post-Eid holidays spread over two weeks, the trend was overwhelmingly bullish – in keeping with the two pre-Eid sessions. Perhaps because of the lingering effect of the celebratory Eid mood or the investors spurning their wariness of the last few weeks that had kept the volumes low and the index well depressed, the renewed vigour saw the market surge.
On Monday, the KSE-100 saw the upper point at the graph around mid-session hitting 200-plus before easing to 92 ahead, and on Tuesday it added another 156 points, for a neat 250-point gain in just two days. On Wednesday too the market closed in the green zone, though just by a whisker, after a seesaw that saw volume swell to around 86 million – not huge, but considering the depression in recent times, an indicator that some measure of investor confidence had indeed been restored. The overall result was around 420 points in the last five sessions, which meant that about a fourth of the recent loss in value had been recovered.
For the Average Joes this is good news. But wait a minute, for Mr Ali Malik, the boss at First National Equities, this is too good to be true – and therefore must be taken with a pinch of salt.
According to Mr Malik the surprise bounce-back is totally against the run of play on three accounts. One, markets all over the world are still mostly down and out. Two, though there has been some respite in terms of the law and order situation in Karachi, it remains uncertain at best, like the lull of recent times – the kind that heralds an approaching storm. Third, the economic scenario in the country does not show the slightest sign of recovery to inspire investor confidence. And on top of it there has been a recurrence of flash floods in Sindh and Balochistan, where the conservative estimate of the financial losses is somewhere between $8 to 10 billion and of the attendant human misery inestimable.
“In a nutshell, this is why I believe that this revival is inexplicable”, said Mr Malik.
MND, this writer’s stock broker, also advises caution, and keeping one’s fingers crossed.
Advice to the Average Joe from these two veterans of the market: book profits where you can and exit pronto.
Yet as ever there are always some good buys. The experts that one talked to remain bullish on the fertiliser sector as a whole, for demand is going to continue to rise, keeping the books of the companies in the black in a big way, enabling them to keep the investors happy with decent dividends. Fauji Fertiliser, in the process of distributing mid-term dividend, has already recovered from the loss in value by the recent dip. And its subsidiary, Fauji Fertiliser Bin Qasim, has also witnessed a constant stream of buyers, its volume on Wednesday alone standing at nearly three million and price upwards of Rs52 – more than 10 per cent higher from Rs42 when yours truly had invested in it during the last week before Eid. From the banking sector, MND is a great backer of Bank Al-Habib. His rationale: a good half-yearly financial report and last year’s high price of Rs37.50 making it a good buy at Rs29. The growing volumes and gradual increase in the share’s value reflect MND’s optimism.
Mr Malik believes that Nishat Mills would have a good investment before it announced Rs3.50 as dividend – but the price rise since has cancelled out that benefit. On a personal note, one has stayed away from the market these last three days, not indulging in trading this way or that. Hopefully there would be something more substantive to report in that context in this space next week.
The writer is Sports and Magazines Editor, Pakistan Today
