The weekend was book-ended by two days of a massive bull-run, tallying up nearly 600 points (278 on Friday and 309 on Monday) at the leading benchmark, the KSE index. The hike took the bourse up within sight of the next psychological barrier of 12,000 points. That was once again against the run of play for most western markets were on a downswing due to the glory that is no longer Greece.
After that surprise surge, said to have come owing to a buying binge by institutional investors, for the last two successive days the market has closed in the twilight zone, losing 106 points on Tuesday and not by much in the next session.
The market insiders however claim that the upsurge was an engineered one, with the big boys combining to give it an artificial boost. Some real fillip, says Mr Ali Malik, CEO of the First National Equities, will come with another interest rate cut in the next monetary policy – which he again predicts is in the offing. And the real boon if the capital gains tax goes.
Whatever the case, the times stay unpredictable and the Average Joe investor needs to remain on his toes constantly. The announcements season, when the excitement is high and frenzied, has fizzled out. And the next payouts are not that close by, hence the activity is likely to remain sluggish – the volume Wednesday was less than 64 million shares traded.
The fickleness of the market therefore rules out going for high-end expensive shares, for when they fall, they fall big – though conversely when they rise, they rise spectacularly. But for the Average Joe, since total elimination is not an option when dealing in stocks, minimising risk is always a priority. So the ‘go area’ that one must prefer would be low-end shares where one could make a decent killing through quick margins.
Unfortunately, not many are available at the moment. As I mentioned before, somebody had advised me to buy Fatima Fertiliser when it was trading at under Rs15 apiece. The promise sounded good: it shall be trading around Rs25 in a month to six weeks. It kept its promise, and has arrived there. But it would have been a speculative move then, but one would have felt well within the comfort zone going for it. One didn’t, and with its books still not balancing and its main sponsor a big fish, at the current tab this would be a very risky option – more so as any further capital gain seems unlikely.
While Fatima Fertiliser is no longer an attractive possibility, fertiliser as a sector still retains its charm because of its huge potential for profitability – with each bag produced guaranteed to be sold at prices that have seen a steep hike.
And here with Engro having one issue or another (the latest was a spat with the excise department), it is the brace of Faujis that stand out. The more powerful of the two is the parent company, the FFC. And at Rs180 each (it has come down after nearly touching Rs200), this is not yet in the expensive zone, but again the Average Joe has to weigh his options before taking a plunge. Though the Chhota Fauji, the Bin Qasim, too has appreciated a great deal to trade at Rs60 apiece, this still falls in the realm of affordable – another consideration, it is a December closing scrip.
Some really cheap options are still available in a sector or two, but the word count is up, so let us leave it for the next week.
The writer is Sports and Magazines Editor, Pakistan Today
