Market absorbs sham political heat

Pakistan's capital market maintained its bullish posture during the first week of the new year while rising deficit was plaguing the economy and domestic politics had experienced parties' bizarre somersaults jolting the ruling coalition led by PPP. To start with the market sentiment had a minor impact of the last Sunday decision of the MQM to sit on the opposition benches in the National Assembly tearing apart the PPP-led coalition's simple majority. Consequently, the market fell by one and half percentiles of the indexed average on Monday last. Market players were perhaps aware of fact that the MQM's annoyance with the Government was temporary therefore they followed strong internal fundamentals of the market. Internally, the market sentiment was bullish for a number of factors including constant inflow of foreign exchange, rising international crude oil pushing domestic prices of petroleum products up, and blue chip stocks promising to offer handsome payouts and corporate earning. All these positive factors added with the political insight of the market players led to a bullish rally on the second day of the week ending Friday last. Thus on Tuesday last the market not only recovered the loss it had faced during the first session but also bettered significantly. In short, the market edged up by over a couple of percentiles in one-go during the second session of the week. Assassination of Governor Punjab Salman Taseer and PML-N leader Nawaz Sharif's so-called ultimatum came Tuesday evening as bad news to deter the investors' confidence during Wednesday's session. However, anticipations of good corporate earnings helped bulls overwhelm the bears. Saddened sentiment clipped the gains still the market bagged a quarter percentile during the midweek session. Though the investors went cautious over the then underway efforts on part of Prime Minister Yousuf Raza Gilani to lure the MQM back in the ruling coalition, they maintained upward trend in stock trade. Energy and fertilizer sectors led a bullish rally on Thursday last when the market bagged net gain of 1.5 percent. Politics looked like at the peak of uncertainty on Friday last when the players preferred to secure their positions ahead of the weekend. Despite majority of players staying on sidelines, the market bettered by a third percentile during the last session of the week under review. Pundits were foreseeing healthy trade ahead since the deterrents on the political side have almost faded away, apparently, at least. They anticipate that MQM's return to the treasury bench would impact well on the sentiment of trade. Moreover, the apparent rapprochement between the PML-N and PPP, at least as claimed Premier Gilani during his press conference here on Sunday after making a phone call to Nawaz Sharif, would also reinforce positive sentiment on bourses. Political analysts were of the view that both the major political parties of the country earlier in a covert alliance, now have indulged in a cit confrontation. They were bound to go for a political tug-of-war having a number of bones of contentions ranging from new governor's appointment in Punjab to the local government elections ahead. Therefore the politics staying uncertain, the economy in shambles, and security situation in the country staying far from being conducive to short-term investment were to keep market players on toes ahead.