The market was in strong grip of bear-run but results from NBP, PSO and MCB helped avert larger declines.
There was strong rumour in the market that government officials had started negotiating with officials of Etisalat and soon some deal would be announced. Another rumour that struck the market was that government officials had offered 1.7 dollars a share, from 1.96 dollars offered in June by the UAE-based company. This brought some relief to market players, helping the index to rebound from its intra-day low.
"With the negative news of the PTCL debacle in the air the index opened with a very negative swing, falling 182 points in the initial hours," said Tariq Hussain Khan, research analyst at Atlas Investment Bank. The selling pressure in PTCL pushed down other scrips, and bears overshadowed the index throughout the day. The index closed at 8247, falling by 69 points at the end. PTCL contributed 46 points to this fall in the bourse index.
One other outcome was that investor interest shifted to banking sector, particularly in NBP, which closed at Rs 153, adding 17 points to the index. Other banking scrips, like Faysal Bank, Askari, Soneri and Picic witnessed positive gains. OGDC was another active scrip, which slid to close at Rs 104.7, contributing 33 negative points to the index.
"With the news of PTCL privatisation on the verge of a breakdown, we expect the market to continue in a depressed phase until a definitive picture emerges from talks in UAE."
According to a foreign newspaper, Etisalat International Pakistan (EIP), a subsidiary of Etisalat, could not meet its commitment to pay 90 percent of the total bid amount of $2.598 billion by October 28 following the withdrawal of a key partner (Dubai Islamic Bank) in the consortium. According to sources, the consortium partner opted out on the pretext that Etisalat had offered too high a price for securing 26 percent PTCL stake with management control.
The UAE telecom firm now seeks more time to complete the transaction, the biggest privatisation deal in Pakistan. Sources added that EIP had also requested Pakistan government for a credit facility from a local bank to replace the consortium partner.
However, the request was turned down. Hasnain Asghar from Aziz Fidahuesin said that after adjustment in the early hours, outstanding corporate announcements by NBP and PSO allowed the market players to shift their stance thereby allowing the market men to cherish as the other sectors soon recovered.
The step taken by SBP to further strengthen the commercial banks, the banks have been instructed to increase their paid up capital to at least six billion rupees by 2009. This also invited fresh buying in the main and second-tier banking stocks. Despite the negative index, the underlying tone, however, stayed positive as the bulls dominated the proceedings other than in the index movers. Technically, index would continue to face resistance around 8325-8333, while support would come around 8210-8217.