Lower-than-expected OGDCL offer price

Cabinet Committee on Privatisation (CCoP) announcement of below the market expectation price for Global Depository Shares (GDSs) and secondary offering of Oil and Gas Development Company (OGDCL) paved way for bearish spell at the Karachi stock market on Friday.

KSE 100-share Index lost three technical barriers of 10,600, 10,500 and 10,400 and fell 230.56 points to close at 10,388.19 points.

The junior 30-Index also registered the same level of decline of 230.99 points to 13,131.32 points.

OGDCL alone contributed 109 points to the total decline of the day in indices. The scrip opened on its lower lock and remained at that level to close at Rs120.85, shedding Rs6.35 with 2.613 million shares traded, Live Securities reported.

CCoP fixed Rs115 per share or $18.90 per GDS to be listed at London Stock Exchange on December 06, 2006. Each GDS will be representing 10 ordinary shares at KSE, it was learnt. Moreover, government would also offer OGDC secondary public offering to retail investors at Rs110 per share in the domestic market.

Both the approved prices – for GDS and secondary offering – were below the market expectation and closing price at Rs127.20 a day earlier.

Ahsan Mehanti of Shahzad Chamdia Securities said that market players were divided into two groups on the issue of OGDCL price.

One school of though was of the view that they should sell out their OGDC holding at current share price that is far above the secondary offering price of Rs110 per share and repurchase them in secondary public offering. This thought dominated in market throughout the day.

The other group of market players believed that investors should retain OGDC holding with its current share price as the scrip has already declined significantly and would rebound within a few sessions, Ahsan informed.

He calculated OGDC fair value at Rs175 per share and said that it was currently trading below its average share price of Rs125 to Rs135. In the medium term, the share price would come up again, Ahsan believes.

Other analysts said that OGDC led pathetic rally depressed other fellow scrips as well. The adverse affect of OGDCL was felt across the board where most of the sectors came under price-fire. However, cement sector performed exceptionally in the crumbling market.

The news of withdrawing sales tax on cement exports and allowing duty draw back helped cement stocks to move in upward direction, they said and added that the international financial assistance to Pakistan for constructing big dams for water reservoirs also provided strength to the cement shares.

A big portion of market participants remained sideline for another day, as the turnover remained thin at 125.706 million shares. Just three million shares up from 122.025 million shares recorded a day earlier market analysts say that turnover was still skeletal.

Market capitalisation fell by Rs85 billion to Rs2.893 trillion.

Live securities said that the market started on extremely bearish note and remained in the negative zone throughout the day with the KSE-100 index marking 303.81 points intra-day low at 10,314.94 point level. Following OGDCL, other notable energy, banking and fertilizer scrips also posted massive declines. However, exceptional recovery was witnessed in cements on news reports mentioning restoration of duty drawback on cement exports. D.G. Khan Cement, Lucky Cement, Fauji Cement and Maple Leaf Cement gained 2.9 per cent, 4.5 per cent, 3.1 per cent and 1.2 per cent respectively to close at Rs72.00, Rs74.25, Rs16.45 and Rs17.50.

Speculative activities were evident in CTTL with the scrip hitting its upper and lower breakers during the session. Finally, the scrip closed at its upper lock and remained volume leader at 15 million shares.

In the broader market, losers outnumbered gainers with a margin of almost 3 to 2. therefore, 157 scrips declined and 97 advance, while the value of 43 remained pegged with 297 active counters on board.

Forward Counter: NBP led the list of actives on this counter, declined by Rs7.70 at Rs266.40 on 11 million shares followed by PPL which shed Rs10.05 at Rs232.65 on four million shares, POL plunged Rs4.35 at Rs349.75 on three million shares, DGKC surged by Rs2.05 at Rs72.70 on three million shares, LUCK rose by Rs2.85 at Rs74.60 on two million shares.

Source: The News