A slew of factors, both international and domestic not to mention profit-taking after a number of bullish sessions, turned the stock market bearish on Friday and Monday. The heaviest adverse impact though was that of the much-publicised spat with the United States, and endeavours at its downscaling and some hints of recovery in the Western markets made the KSE return to buoyancy on Tuesday and Wednesday.
On Monday afternoon, after the market took a serious tumble, by 342 points to be precise, the scenario looked ugly and scary. Worse it seemed like a spiral, with this downward trend apparently likely to continue for a while. Such a scenario can make anyone freak out, especially the Ordinary Joe who is more often than not keen to stay for the longer term, as opposed to the speculator who is enthusiastic for quick gains, but, normally the one with limited means, he is naturally dismayed in the extreme when he sees his assets dwindle in a jiffy. At such times avoiding a panic attack is difficult.
The rapid and smart recovery the next day though may have dispelled some worries. Though the threat of volatility reappearing has by no means vanished – the uncertain state of the economy and geopolitical question marks not exactly conducive in alleviating uncertainty, but the attractiveness remains owing to relatively lower prices that promise capital gain and decent profits.
And this factor is likely to keep the market relatively stable, and upwardly mobile, despite occasional hiccups.
In the bounce back, most of the leading stocks in the oil sector and the December-closing companies regained their value, while the performance of both the listed Fauji Fertilizer companies – the parent and the subsidiary Bin Qasim, called the Barra (Big) and the Chhota (Small) Fauji in the market lingo – was quite spectacular. In the last few weeks each of the two have sustained investor interest, in the process supplementing their gains to well over a dozen rupees. And such is the faith of both that this ascendant stance is likely to prolong, for there is still value to be gained.
In the previous piece one had mentioned some buying and selling by this scribe. One is happy to note that all three scrips – Fauji Fertilizer, Bin Qasim, Habib Sugar Mills and Bank Al-Habib that one had invested in had seen appreciation in price.
The trio still remain pretty good buys, for all three are good bets to yield capital gain and dividend, and this means retention of interest of everyone – institutional buyers, ordinary punters and, of course, speculators.
Another factor that enhances the appeal of these companies is their pricing: all at the lower end of the scale, which means that one does not have to commit and expose large sums. There are other such scrips, especially in the banking sector that appear to have excellent prospects. These are Allied Bank, United Bank and, though slightly expensive, above-Rs100 band, Habib Bank Limited.
Though the jitter this time was extremely short-lived, lasting over the weekend and up till Monday before the bulls made their reappearance, yet for the ordinary Joe caution should remain the byword. One would not advise hesitation in investing, but as one has repeatedly said in this space, one should undertake one’s own research and a thorough one at that before consulting the broker and making a commitment. So read the financial reports well, not ignoring the minutest detail, ensure that the company is a sound performer that has a history of paying out dividend and bonus shares. It is imperative especially when the market takes an unexpected downturn. In that case, sitting out the bad times, the value of dividend/bonus shares is a most consoling one that keeps one going.
The writer is Sports and Magazines Editor, Pakistan Today