Pakistan's Karachi Stock Exchange takes a deep plunge again
Pakistan Times Business & Commerce Desk

KARACHI: The share market was back to square one on Thursday, when panic selling triggered by some rumors dragged the index below 8000-point level.

Though the market had a positive opening after the KSE management reported smooth settlement of outstanding positions against the March Futures contract on Wednesday.

The upbeat sentiments were also aided by reports of growing foreign interest in the divestment of national assets.

This induced fresh buying in the PTCL but soon the upward drive was checked because of the offloading of heavyweights like the PTCL and OGDCL by institutions at higher prices.

However, the punters continued to pick up major stocks including PPL, PSO and PPL, which stabilised the market for a little while.

By mid-day, rumours were afloat that the KSE was offloading stakes of various brokerage houses which were unable to pay the exposure inline with their outstanding positions and that the exposure rates for Futures trading were being further tightened in order to avoid any crisis in future.

There was also loud whispering in the market circles that the investigation initiated by SECP regarding the recent crisis could affect the big players.

These reports turned to the advantage of bears who once again managed to oust the bulls and occupy the driving seat.

Thus in the last hours of trading, the earlier gains were completely wiped out and the market closed in the negative territory with a net loss of 315 points thereby showing a cumulative decline of 499 points in the index.

Hasnain Asghar Ali said that the index would continue to find support around 7730-7757 while the overhead resistance stays at 8033—-8037.

He added that the growing economy and the country’s improving image are likely to increase the inflow of foreign investment for infrastructure, oil and gas exploration and other development projects which should have a positive impact on the equity market.

This will help the bourse to stage a rebound and send the index to dizzy heights. The investors can opt for trading and placement in main stocks offering high yields and trading at low PE. However, they should scrupulously avoid picking up overvalued shares.

The market took a nosedive after two days’ smart recovery breaking 8000-point barrier, closing well below 8000 level at 7770.33 as against 8085.56 a day earlier, thereby shedding 315.23 points or 3.9 per cent.

The backtracking has come as a rude shock to the harassed and battered investors who had taken a sigh of relief at the end of the long night of agony only two days ago.

The market remained highly volatile throughout the day, making an intra day high at 8,247 earlier but after mid-day, it slumped to the intra day low of 7,751 on heavy bouts of selling.

However, it closed at 7770.33, down 315.23 points, on short covering. Cement, oil, telecom and banking sectors attracted major interest in the market.

But after hitting the day’s peak level, the market took a descending path on aggressive selling by the bears and closed on a negative note.

The business volume was down by 10.4 per cent at 400. 589 million as compared to 447.278 million a day earlier. Total market capitalisation also fell by Rs85 billion at Rs2144.190 against Rs2229.009 billion a day ago.

Of the 411 active companies, 90 posted gains while 292 recorded losses and 29 remained pegged at the previous level.

Analyst Shahab Farooq opined that despite a long-term positive outlook, he believed that the market would remain extremely volatile in the near term and hence he recommended accumulation of fundamentally strong shares including FFC, FFBL and NCL.

The KSE-100 index caved in after being 165 points up in the morning. Effectively from that point the index witnessed a fall of 499 points to an intra-day low of 7751 points.

Overall, the KSE-100 index closed 315 points lower to the 7770 point level. PSO, PPL and PTCL led the early morning rally and respectively made intra-day highs at Rs447.00, Rs240.00 and Rs75.85. Nonetheless, thereafter the index slid in the most abrupt manner.

There were rumours pertaining to changes in the futures market mechanism. A wave of panic selling ensued and most blue chips and second tier scrips closed at their lower circuit level.

These included OGDCL, PTCL, PSO, FFBL, D G Khan Cement, National Bank, SNGPL, POL and PPL. However, MCB and PICIC were the only scrips in the greener territory. Both the scrips respectively posted gains of 4.6 per cent and 2.1 per cent.

The market has yet to settle down with sustainability above the 7425 point level vital for the market’s future direction, said analyst Tanvir Abid.

He, however, advised the investors to maintain a cautious stance with gradual accumulation in fundamentally sound and defensive scrips. These include HUBCO, FFBL and Lucky Cement.

The OGDC seemed to cause most uncertainty in the minds of the investors but evidently institutional selling was at the back of the reverses suffered by the market on Thursday.

Analyst Tariq Husain Khan said that he would like to advise caution, as market participants seem to have lost confidence.

Among the volume leaders were PTCLA, down by Rs3.65 at Rs70.25 on 89.513 million, OGDC, easier by Rs5.85 at Rs111.55 on 39.744 million, Pak PTA, lower by Re.one at Rs13.40 on 33.612 million, FF bin Qasim, loser by Rs1.55 at Rs29.80 on 28.756 million, PSO, leaner by Rs20.90 at Rs398.00 on 24.164 million, DGK Cement, dimmer by Rs3.15 at Rs 59.95 on 22.925 million, National Bank, off Rs6.10 at Rs115.90 on 18.622 million, Fauji Cement, down by one rupee at Rs15.60 on 11.907 million, TRG Pakistan, loser by one rupee at Rs13.85 on 9.345 million and Sui South, weaker by five paisa at Rs24.50 on 9.214 million.

The major gainers included Treet Corporation, up by Rs25.00 at RS 425.00 and Berger Paints, higher by Rs9.00 at Rs129.50.

In the minus column, Wyeth Pakistan shed Rs54.00 at Rs1026.00 and Shell Pak fell by Rs26.40 at Rs501.60.●