Flat after the bloodbath over four sessions that brought the KSE-100 benchmark below the psychological 11,000 points, was the good news Wednesday. Though around three points down, this still is some recovery from 277 points down and hovering around 10,700 mid-session Tuesday after the temporary pull back from the eyeball-to-eyeball confrontation between the government and the judiciary seemed to be edging towards its denouement.
The volumes have remained extremely thin and values have dropped. This is not likely to improve a great deal in the short term. And unless there is some shocking news that sends the bears on a rampage, the market would keep on hovering between here and 11,500.
To those Average Joe Investors who have taken a pasting in this sizable dip, my commiserations. But they need to remember: the possibility of a bounce back is always there, and in the mid-short term (which is over the next six months, as Mr Ali Malik, CEO of the First National Equities predicts), it could claw its way back to the recent high of 12,000 points. So those who have made their buying after due diligence and in fundamentally strong shares have only to bide time.
The good thing about low values is that it may provide the prop the market needs, for cheap buys always hold an attraction for all sorts to make a punt.
Despite the gas shortages, the fertiliser remains a popular sector and on Tuesday the recovery was led by it – with FFC up by Rs3.49 and FFBQ Rs1.43. To Hammad Malik, senior associate at the First National Equities, Fatima Fertiliser (the entity that has reportedly suffered the least owing to friends at the right places) is likely to go up to Rs27 – a gain of around Rs4 from its current value. It has already touched Rs25 some weeks ago, and may indeed still have some juice. This is a cheap option where even if there is a fall, it is not likely to be big. But one thing needs to be remembered: the company has never paid any dividend, though it is now said to be in the black. So there are both good and bad reports about it. Read between the lines and tread carefully.
In the oil sector, the additional public offering of Pakistan Petroleum Limited is expected in a few weeks, perhaps some time in February. That is anxiously awaited, for it might bring some spark to thus far an otherwise mostly cheerless season. For the moment, the company is going through a ‘size determination’ process. Once that is complete the price per share of the offering will be revealed. For the moment, it is being traded at Rs164 apiece – way short of its recent high of Rs210-220 range.
Mr Ali Malik is one analyst who has a very special knack of finding nuggets at places which most people ignore. He has come up with two inexpensive beauties in the power sector that have so far never paid a dime in dividend but are sitting on a sizable stash of cumulative profits that they are bound to dish out to shareholders this coming June. These are: Nishat Chunian Power and Nishat Power. The group is a force to reckon with – the largest in the country, the power sector is profitable and the price at an identical Rs13 apiece for both is a bargain. This is what you call a better than a decent tip – and in such times of turmoil worth its weight in gold.
That said, dear Average Joe Investor, do make your own research before taking the plunge.
The writer is Sports and
Magazines Editor at Pakistan Today