The last few weeks were more of a seesaw at the bourses – a little surge here and there, followed by a small dip or a serious plunge and vice versa again, with bears dominating overall. Between profit-taking and panic-selling, the recovery, whenever it came, barring an odd occasion, was quite feeble – such as on Wednesday by 23 points to make the KSE-100 index stand at 11,300.
This is quite steep, but this shrinkage is understandable. The abrasive political climate and the relations with the US on a brink were enough to cause their own tremours. In the thick of it, as is the wont in these winter months, the load-shedding of gas has brought its own havoc by choking two critical industries – fertiliser and textile.
Deprived of gas for four days in these peak production weeks when winter and spring inventories in the west have to be catered to, the textile barons are up in arms at turning off the gas tap for four straight days and threatening street protests. And since gas is one of the ingredients in fertiliser production itself, and not merely an energy resource, scrips in this otherwise highly profitable sector too have taken a pasting of sorts.
The confidence of the foreign investors was not that high in the first place, reflecting in the net inflows being far less in size and volume than the outflows – which have been quite abrupt on occasions, creating their own seismic waves. The geo-political situation, more precisely the latest standoff with the US, is also not making them go bullish on our markets.
For the Average Joe Investor this is a period of some anxiety, for witnessing erosion in the value of ones holdings does cause pain. He must be asking, how long will this situation prevail? The depression that a depressed market causes among its patrons is nothing new. What needs to be kept in view is that the situation is not nearly as bad as it was during the meltdown that commenced in the later part of 2008, causing it to lose more than two thirds in value to hit rock bottom at 4,600 points by January 2009.
And unless something dramatic, something really adverse, happens, there is not much cause to worry or panic. Keeping a close watch though is a must.
Mian Nusrat-ud-Din, who by the way handles my insignificant portfolio, is a canny, vigilant and scrupulous operator. The first two attributes, and a few others, you’d find in many in the markets all over the world, the last in a select few. He is also an irrepressible optimist. With the KSE-100 index having lost 700 points in 10 trading sessions, which translates into value diminishing by a whopping three per cent, there is still a hint of gleam in his eyes. For the Average Joe, he sniffs an opportunity here.
“The market is at a low. There are options out there for the taking. These would not be there in a month’s time. This is the time to go for it, if you have cash to spare”, says MND. But as is his wont, he wouldn’t make a statement without a rider. “I always say that those who have done their buying right, checking out on all the fundamentals, wouldn’t remain in the doldrums for long even if they hit them occasionally.
“What I see is good dividends and capital gain in the fertiliser, oil and the banking sectors. Some companies have been exceptionally good. Look at Fauji Fertiliser, it is right now paying out 50 per cent interim dividend from its third quarter earnings alone. What more do you expect? After its board meeting somewhere in February 2012, more moolah is likely to be there”, says MND.
He sounds right. In recent weeks, the FFC has lost around Rs30 in value, but it is going to make that up in the weeks to come when the year-end, new-year buyers get engaged as they do around this time. Another way to look at it is that the FFC had gained around Rs80 in value this year. So even after the recent downturn, it is still Rs50 up. Not a bad bargain for an investment of Rs100 apiece! The point here is, buy the right ones, and the odd cloud aside, one would mostly be a winner.
The writer is Sports and Magazine Editor, Pakistan Today