With only four sessions between the last piece and this one, evenly split between the ongoing and the last week, the market sentiment mostly has mostly veered between insipid and negative. The last two sessions of the previous week were markedly bearish, on the back of another such spell earlier. As a result the market has by now shed nearly 600 points – the distance between the present 11,400-odd and the 10-week high of 12,000 that it had hit a couple of weeks back.
With hindsight, celebrating a steep cut in interest rate perhaps was an overreaction of sorts. And with nothing more exciting in the follow up, the trend has mostly been dismal.
Now that this lack of enthusiasm seems to have set in, it is likely to continue for a while. There are reasons for it. The economic and political conditions too are not helping the market move to an upward trajectory. The political turmoil within the country has even inclined the institutions towards profit-taking and selling. Combined with an absolute lack of interest among the foreign investors, and a wait and see approach amongst the ordinary buyers, the bears have mostly prevailed.
Another reason impacting the market is that the financial handouts period, that had provided the bourses some spur with hectic activity in the market leaders with prospects of good dividends and bonus shares, is now over. And with the next reports for the December-closing entities not expected before end January 2012, even mid-February, this is likely to be the lacklustre period anyway.
Mr Ali Malik, CEO of the First National Equities and someone whom I find to have his finger on the pulse of the market, believes November might be better for the market. Clued in as he is, when Mr Malik makes an informed forecast one has to take it seriously, for remember he has already correctly predicted the interest rate-cut twice well before it was announced by the State Bank of Pakistan – and was reported in this space at the time.
This time round, Mr Malik says that capital gains tax on trading in shares may be taken back by the government, as early as some time in November. Why November? Because, says Mr Malik, the last date for filing tax returns is Oct. 31 and so by the first or second week of November the FBR would have the exact data to make a decision. If that comes to pass, it would be a decent development that may have a positive bearing on the investors’ outlook.
For the Average Joe Investor this is good news, for it would definitely give investors an incentive and consequently provide the market a boost, probably a longer lasting one than the brief euphoria caused by the interest rate-cut.
For those with spare cash and an intent to invest, the fertiliser sector though slightly overheated, still retains its charm as those who follow fertiliser say that it still has some juice. But do remember to buy only in those companies which have locked in the supply of gas in the coming winter when the state utility companies usually have a harsh gas-shedding regimen in place to accommodate the spike in domestic consumption.
Otherwise, play the waiting game, hoping that better times are just round the corner.
The writer is Sports and Magazines Editor, Pakistan Today