STOCKS received fresh massive battering as the standoff on the COT continued until mid-week. Although late reports of extension generated a good bit of short-covering in the leading oil shares, the rally was too feeble to suggest that the worst is over.

A massive decline of 400 points ore 7.5 per cent in the index around 71,01.00 and eroding of Rs72.00 from the market capital reflects that the market may have to go an extra mile to demonstrate that the market is well on the road to recovery.

There were, however, signs of recovery followed by the revival of strong covering purchases in the leading oil shares including OGDC, PPL, PSO, Pakistan Oilfields and some others notably PTCL and some of the second-liners, no one could, however, precisely predict how the market will behave during the next week.

Despite the extension of the Carry Over Trade (COT) from June 3 to Aug 3, stock market failed to recover from the early lows as attempted mid-week rallies failed to put it back on the rails.

The COT seems to have taken steam out of the market as investors think twice to re-enter the market amid reports of a row between the KSE high-ups and the SECP, the regulator on certain issues still unresolved. The prime minister has intervened to settle the dispute and the market may by back on the rails during the coming week.

But some leading analysts predict that investors are still in two minds about the direction of the market and could not precisely decide how to react to the developing situation despite the fact its highly oversold position ensures capital gains. But investor perceptions about the future outlook are poles apart and reluctant to resume normal trading.

The market’s current outlook is well-reflected in the steep decline in the KSE 100-share index, which shed another 411 points at 7,101.38 as compared to 7,5712.91 a week earlier, eroding about 72 billion from the market capital.

Stocks fell across a broad front on panic selling triggered by the prevailing confusion over the extension of Carry Over Trade (COT) issue but there was no official word from the KSE about its meeting with the chairman of the SECP on its proposal.

Earlier the COT-related panic selling gripped the entire market but the decline was led by the energy and cement sectors, which remained under pressure. The market sentiment was also influenced bearishly by reports that the fiscal measures in the new federal budget will have a provision to tax the speculators who have made massive capital gains in the share and property business.

Most of the gains both in terms of index and capital appreciations netted during last three sessions of the previous week were clipped owing to prevailing confusion on the COT issue.

“The market could suffer fresh erosions in case of no but will rise if the SECP response is positive and it has decided to go along with the KSE thinking to avert a possible collapse”.

The KSE delegation met the chairman of the Security & Exchange Commission of Pakistan (SECP), on last Saturday and sought his approval to extend COT (badla financing) to pull the market out of the current state of uncertainty but so far there is no official word on the issue.

Conflicting rumours are circulating in the market. Some claim the SECP has given its nod for the extension of COT up to Aug 31.But some others say he has rejected KSE proposals but the KSE is silent on the issue.

“The KSE should have come out with the outcome of talks rather than keeping mum on the issue”, analysts said “yes or no from the SECP should have given an option to investors to redefine their investment priorities”.

Most of the market leaders and heavy weights including PTCL remained under pressure and shed a good part of gains scored during the last week. Pakistan Oilfields whose board met during the week was an exception amid reports of higher EPS but remained under pressure.

Minus signs dominated the list, major losers being Javed Omer, Gatron Industries, Artistic Denim, National Refinery, PPL, Fauji Fertiliser, Pakistan Oilfields, PSO, OGDC, PTCL, Wyeth Pakistan and several others.

Mari Gas, Lakson Tobacco, Abbott Lab, Ferozsons Lab, HinoPak Motors, Jahangir Siddiqui & Co and EFU General and GoodLuck Industries were an exceptions, which moved higher under the lead of Parke-Davis and some others.

FORWARD COUNTER: Market leaders, notably PTCL,PSO, OGDC, Pakistan Oilfields and PPL cloud not rise from the early lows and ended the week with fresh sharp fall under the lead of PPL, and PSO. Some of the second-liners, notably Pak PTA, Fauji Fertiliser Bin Qasim and some others managed to finish modestly higher on active support at the falling prices.—Muhammad Aslam