Uncertainty erodes market two years gains

LAHORE - The equity market's downward trend on Monday appeared seeing no bounds at the onset of the new trading week, as stocks ended the day 3.13 per cent lower at about 23-month low due to continued political uncertainty following the USA mistrust on Pakistan's main intelligence agency.

The Karachi Stock Exchange benchmark 100 index fell 3.13 per cent, or 318.21 points, to 9.853.18, falling below the psychological barrier of 10,000 points, on turnover of 101.3 million shares.

The KSE-index ended at 9,584.79 points on Aug 25, 2006.

Experts were of the view that uncertain political atmosphere along with the macro economic scenario is continuously haunting the investors and would definitely shape the future direction of the market.

The KSE-index is down by 30 per cent so far this year and is 37 per cent lower than its life high on April 21.

Dealers said portfolio outflows and some import payments added pressure on the local unit.

The rupee also ended weaker on Monday at 71.87/97 against the dollar, compared to Saturday's close of 71.80/84.

Local investors especially, the smaller ones almost on the verge of bankruptcy kept looking forward hopelessly for some miracles rescuing them from the final sink.

The market barely after two hours of trading was seen to have lost over 300 points, as the 100-index pegged at 9870 points, while the KSE-30 index shed by 394 points traded at 11054.

They said that investors' confidence is extremely low because there was not much clarity on the political front.

The investors have harboured doubts whether the government has the ability to handle widening trade and fiscal deficits and inflation at a three-decade high.

Authorities on Saturday conducted a special trading session for investors with leveraged positions to offer their shares at Friday's closing levels, after the index hit a 19-month low.

All shares index lost 224.73 points and closed at 7126.26 points.

From 278 traded scrips 46 managed to close plus and 222 gave minus closing while 10 scrips kept last closings. Volumes once again started improving and 131.193 million shares changed hands in today trading. NIB bank is holding top position in volumes with traded volumes of 14.128m shares and first touching its lower limit improved and closed just two pisas down. ATLH dared to test its upper limit but closed bit lower while remaining in plus column. Among the most active companies, volume leader NIB Bank  fell 0.2pc to 8.96 rupees, DG Khan Cement shed 5pc to 48.96 rupees, while National Bank ended 5pc lower at 108.08 rupees.

Analysts said that political uncertainty and negative economic indicators were driving the market down, eroding its two years gains. Market is mature to stage technical recovery and that can be expected today but long-run market trend will remain negative.