Market awaits approaching new lows

The Pakistani stock market closed on Friday the last day of the trading week (June 16-20, 2008) under review at 11655 point with a decrease of 789 points with reference to the closing of the market at12444 points on June 16, 2008, the first day of the trading week under review and 1287 points down in comparison with the closing of the market at 12942 points on the previous Friday June 13, 2008, the last working day of the previous trading week.

Panic selling again dominated trading on the KSE on Friday, the last day of the trading week under review as institutional efforts to put the market back on the rails after injecting a fresh liquidity on selected counters failed in the absence of other supporting factors. The 100-share index was off 215.67 points at 11,655.28.

"The stakes in the share business are now pretty high," analysts said. "Investors are now thinking beyond the market crashes of March 2005 and June 2007 and March this year, which together wiped out well over $35 billion from the market capital."

However, it appeared to be a man-made tragedy, they said, adding as far as basic market fundamentals were concerned, they were  positive and heal back the wounds within no time in normal political conditions and they needed sanity for stock trading. The 100 index shed another 215.67 points  making the total loss of the week to 1,300 points eroding a massive amount amount of Rs396 billion from the market capital. The final close was at 11,655.28 points. Its junior partner also fell by 304.80 points at 13,368.79.

All the leading base shares again fell by limit fall under the lead of National Bank, Arif Habib Securities and Engro Chemical on persistent selling by no matching support from any quarter.

"It was not a single factor but a combination of it, which continued to have their pound of flesh," analyst Ch Anwarul Haq said, adding: "but notable among them are foreign selling, weak rupee and economy and on the top of it is political uncertainty and pending of some core issues".

Late Thursday's meeting of top bankers, financial institutions and central bank high-ups aimed at putting the market back on the rails after taking corrective measures should have buoyed investors, but an attractive bait of lower level failed to net them in, analyst Ch Anwarul Haq said.

But some others said the market should have responded to this positive development as those who matter had taken a notice of the recent market crash but rumors about the future of the government again generated a good bit of panic-selling

Minus signs again dominated the list under the lead of JS & Co, and Unilever Pakistan, off by Rs23.75 and Rs20, followed by Habib Ltd, Adamjee Insurance, EFU General, EFU Life, Attock Refinery, PSO, Mari Gas, Pakistan Oilfields, Engro Chemical and Packages, which suffered fall ranging from Rs7.44 to Rs18.43.

Nestle Pakistan and Sapphire Fibres rose by Rs62 and Rs10.07, respectively. Other prominent gainers were led by MCB Bank, New Jubilee Insurance, Atlas Honda, KSB Pumps and Clover Pakistan, up by Rs5 to Rs7.

Trading volume was maintained at the overnight level of 160m shares but losers held a strong lead over gainers at 213 to 88, with 23 shares holding on to the last levels.

NIB Bank again led the list of actives, lower by 49 paisa at Rs10.51 on 19m shares followed by National Bank, sharply lower by Rs7.44 at Rs141.48 on 11m share, D.G. Khan Cement, lower by Rs2.13 at Rs59.58 on 9m shares, Bank Alfalah, off Rs2.02 at Rs38.45 on 8m shares, Arif Habib Securities, off Rs7.51 at Rs144.50 on 8m shares, OGDC, easy by 70 paisa at Rs122.50 on 6m shares and Engro Chemical, sharply lower by Rs13.77 on 5m shares.

Other actives were led by Lucky Cement, easy by 25 paisa at Rs93 on 7m shares, United Bank, off Rs4.32 at Rs82.08 also on 5m shares and Adamjee Insurance, lower by Rs13.32 at Rs253.16 also on 5m shares.

The 100-share index on Monday, the first day of the trading week under review plunged by about four per cent on panic selling triggered by Afghan president's threat to send troops to Pakistan to haunt Al-Qaeda militants.

"Karazi might not have the courage and will to invade Pakistan," said a leading analyst, adding "What worried investors was the perception that the veiled threat may have come from Nato commanders through him."

There was a near-panic and confusion all around in the already terribly fragile bourse as investors tried to get out of the market but failed to find many willing buyers even at the dips.

The market's near-collapse below the resistance level was evident from a massive single session decline of 497.43 points at 12,444.13, which wiped out Rs158 billion from small savers investment in the shares business.

The free float-30 share index on the other hand suffered its highest single session fall and was off by 4.51 per cent or 687.26 points at 14,552.29.

Banking shares, followed by reports (subsequently denied) that the government may withdraw its deposits from the five leading banks, including National Bank and leading oil shares, notably OGDC, Pakistan Oilfields led the market decline on active selling at the still attractively higher levels.

The other factor, which aggravated the situation, was foreign agencies poor rating of Pakistani currency and its relative weakness in the coming months, also followed by a galore of lower locks on all the blue chip counters, analysts said.

The local political uncertainty continued to take its toll also as benefits of exemption in the capital gains tax and some other relief for the capital markets were over-shadowed by negative external developments, analyst Ch Anwarul Haq said.

"The daily low volume figures show that huge amounts of money may have out flown to other safe havens," Gulfam Ahmad Khan Sherwani said, adding "others are on the threshold of finding some other profitable investment avenues."

The near-term outlook for the share business appears to be bearish, which is well-reflected in the falling daily turnover figures, reflecting the absence of investors analyst Ch Anwarul Haq predicted.

Top gainers were led by Exide Pakistan and Dreamworld, up by Rs5.70 and Rs5.35, followed by Shaheen Insurance, Pakistan Cables, AKD Capital and Adamjee Insurance, which rose by Rs1.70 to 5.15.

Leading losers were led by JS & Co, EFU Life, EFU General, Pakistan Oilfields, and Wyeth Pakistan, off by Rs20.05 to Rs103, respectively. Other leading losers, which also faced lower locks included Arif Habib Ltd, JS Global, MCB Bank, Attock Refinery, Attock Petroleum, PSO, Al-Ghazi Tractors, Dawood Hercules, Packages and Colgate Pakistan, off by Rs12.99 to Rs22.10.

Trading volume was light at 108m shares as compared to 104m shares at the last weekend as losers held a strong lead over gainers at 251 to 44, with 14 shares holding on to the last levels.

NIB Bank led the list of actives; easy 60 paisa at Rs12.40 on 6m shares followed by Adamjee Insurance, higher by Rs5.15 at Rs276.40 on 5m shares, National Bank, sharply lower by Rs8.65 at Rs164.35 on 5m shares, OGDC, lower by Rs4.95 at Rs125 on 4m shares and Pakistan Petroleum, sharply lower by Rs11.50 at Rs257.50 on 3m shares.

Other actives were led by Fauji Fertiliser Bin Qasim, lower by Rs1.20 at Rs36.75 on 3m shares, Azgard Nine, off Rs3.30 at Rs62.70 also on 3m shares and Nishat Mills, Rs4.92 at Rs93.58 also on 3m shares.

Stocks on Tuesday, the second day of the trading week under review turned in an improved performance and recouped a good part of the initial losses under the lead of oil sector, but the activity remained terribly insipid in the absence of buyers. The 100-share index was finally up by 54 points after having fallen by 413points in early trading.

However, the future direction of the market was still unclear despite the fact that the index recovered over 400 points from the early lows and much would depend on resumption of normal activity by the institutional traders, analysts said.

They said abolition of 0.1 per cent stamp duty on shares by the Sindh government, announced in the budget on Monday, was also one of the supporting factors that had triggered buy-stops on selected counters at lower levels.

The 100-share index was early down by 400 points as foreign float failed to find willing buyers even at lower levels in the backdrop of tensions caused by Afghan President Karazi's threat of hot pursuit into the Pakistani territory.

However, the situation improved a bit after mid-session as leading oil shares came in for active short-covering followed by reports of record high oil prices near $140 per barrel on world markets.

Finally, the index after hitting the session's low at 12,031.09 managed to finish with a gain of 53.73 points at 12,497.86 from Monday's closing of 12,444.13. The 30-share index also recouped 54.93 from the over-night's record fall of 688 point at 14,607.22.

"I don't foresee an immediate change in the investors' buying strategy amid prevailing political and economical situation," said Ch Anwarul Haq.

Investors were finding out new profitable outlets abroad and here, but they could be back if sanity returns to political front, some others said.

Leading gainers were led by Pakistan Engineering and Arif Habib Ltd, up by Rs18 and Rs12.08, followed by PSO, Al-Ghazi Tractors, Habib Bank, Attock Refinery, Pakistan Oilfields, Pakistan Petroleum, Dawood Hercules, Engro Chemical and some others, which posted gains ranging from Rs5.34 to Rs9.60.

Siemens Pakistan and MCB Bank were top losers, off by Rs78.35 and Rs9.68 at Rs1,488.65 and Rs291, respectively. They were followed by Thal Industries, Lucky Cement, Mari Gas, Shell Pakistan, Pak-Suzuki Motors and EFU General Insurance, off by Rs5.27 to Rs9.68.

Trading volume showed a modest rise at 129m shares as compared to 108m shares a day earlier, but losers held a slight edge over the gainers at 139 to 129 with 25 shares holding on to the last levels.

NIB Bank topped the list of actives easy five paisa at Rs12.35 on 11m shares followed by Lucky Cement, sharply lower Rs5.27 at Rs100.18 on 8m shares and Arif Habib Securities, up by Rs2.30 at Rs164.80 on 7m shares.

National Bank, steady by 65 paisa at Rs165 also on 7m shares, D.G. Khan Cement, off Rs1.88 at Rs68.80 on 5m shares and OGDC, up by Rs1.50 at Rs126.50 also on 5m shares.

Engro Chemical, sharply higher by Rs9.10 at Rs297.90 on 4m shares, Bank Alfalah, lower Rs1.01 at Rs43.99 also on 4m shares and Nishat Mills, lower by 33 paisa at Rs91.25 on 4m shares.

Stocks on Wednesday, the third day of the trading week under review again fell across the board on hasty foreign selling triggered by reports that the Senate Committee has recommended to the National Assembly 100 per cent increase in Capital Value Tax from 0.2 per cent to 0.4 per cent on share market transactions. The 100-share index shed another two per cent at 12,261.07 points, eroding Rs71 billion from the market capital at Rs3,775 billion.

But what was more disturbing was that there were more sellers than buyers in a virtual prevailing panic caused by the local political uncertainty and the changing geo-political environment.

The 100-share index was off by 236.79 points at 12,261.07 at the entire leading base shares, notably MCB Bank, National Bank, on reports of proposed three per cent increase in income tax, OGDC, Lucky Cement, and Arif Habib Securities suffered fresh fall on renewed selling. The 30-share index on the other hand poste4d larger fall of 412.77 points at 14,194.45 or 2.83 per cent.

"The market is now in a real trouble cornered by a spate of negative news and no immediate safe exit," analyst Ch Anwarul Haq  said, leading: "It could take a sigh of relief if the sanity returns to political leaders and they get to work than indulging in press statements".

Another leading analyst Ch M Jamil Painda said continued selling by foreign funds on the banking and cement sectors did not allow the market to take even a technical breather and prices kept falling without finding any willing buyer even at the dips.

"A loud talk to increase the Capital Value Tax, and cut in margin of refineries and oil marketing companies was another immediate depressant," he said.

Analyst Ch Anwarul Haq  thought the post-election dust raised on the political front on some core issues, including the reinstatement of judiciary has taken away the positive impact of exemption in capital gains tax and some other fiscal relief in the national budget.

The falling daily turnover figures indicate that the worst still may have to come as investors are progressively shifting to other profitable to investors avenues, he said.

Some of the inactive issues came in for stray support and rose by Rs7.94 and Rs11.07 for KSB Pumps and Treet Corporation, followed by EFU Life, Island Textiles, Bhanero Textiles, AKD Capital, Dreamworld, and Habib Bank, which rose by Rs4 to Rs7.93.

Top losers were led by JS & Co and Dawood Hercules, off by Rs25.15 and Rs15.63, respectively. They were followed by Arif Habib Ltd, National Bank, EFU General, New Jubilee Insurance, Attock Refinery, Pakistan Oilfields Indus Motors, Pak-Suzuki Motors, Exide Pakistan, Packages, and MCB, which suffered fall ranging from Rs8 to Rs13.50.

Trading volume again fell to 120m shares from the previous 129m shares as losers held a strong lead over the gainers at 193 to 80, with 22 shares holding on to the last levels.

KESC came in for modest supportand led the list of actives, up by 94 paisa at Rs5.49 on 10m shares followed by Lucky Cement, off Rs3.38 at Rs96.80 on 9m shares, D. G. Khan Cement, off Rs2.79 at Rs66.01 on 8m shares, Arif Habib Securities, sharply lower by Rs7.80 at Rs157 on 6m shares, OGDC easy by Rs1.50 at Rs125 on 5m shares, National Bank, off by Rs8.25 at Rs156.75 on 4m shares and Bank Alfalah, lower by Rs1.39 at Rs42.60 on 3m shares.

Other actives were led by NIB Bank, lower 63 paisa atRs11.72 on 7m shares, Bank of Punjab, easy 21 paisa atRs33.80 on 5m shares, and Nishat Mills, off Rs4.56 at Rs86.69 on 3m shares.

The 100-share index took another massive plunge of 390.12 points at 11,870.85 on Thursday, the second last day of the trading week under review as investors tried to get out of the market after unloading long positions, but there was no matching support from any quarter.

"Those who should have intervened to protect the interests of small investors at this stage seem to be witnessing the market decline from the sidelines," said a leading analyst Ch Anwarul Haq  adding: "all may have not gone mad at the time of need and sanity should have prevailed".

An idea of investor apathy might well be had from the fact that a higher second interim cash dividend for the year ending on June 30, 2008, by Pakistan Petroleum at the rate of Rs10.50 per share or 105 per cent failed to enthuse investors who preferred selling its shares rather than buying at the lows, pushing its share value off Rs8.59. Its directors had already paid first cash interim dividend of 30 per cent.

Proposed increase in the capital value tax, cut in refinery margins and foreign selling again dominated trading amid light turnover, but major price changes were dominated by political uncertainty.

The  100-share index suffered a massive fall of 1,124.34 points, eroding Rs175.00 billion from the market capital during the current week, a colossal loss in value terms judged from any quarter and is said to be beyond the scope of inbuilt safeguards to cope with similar situations.

The breach of the psychological barrier of 12,000 (career-best 15,776) is very significant in more than one ways as it could pave the way for further erosion in the coming sessions on selling without matching buying, he added.

The free float 30-share index also broke the barrier of 14,000 points and suffered bigger loss of 520.86 points at 13,673.59 as leading shares mostly faced lower locks.

The successive lower locks in leading base shares, notably MCB Bank, Engro Chemical, Pakistan Petroleum and some others signal the plight of the market and the future shares business outlook, Ch Anwarul Haq said.

There could be cited more than one reason for the current market worries by analysts but no one says how regulators should react to meet such terribly bad situations, Ch Anwarul Haq said, adding: "it pains me to watch the collapse of a strong base built above the 15,700 index level amid talks of 20,000 index level". Minus signs again dominated the list under the lead of Siemens Pakistan, and Colgate Pakistan, off by Rs38.65 and Rs31.75 followed by JS Global, Habib Bank, MCB Bank, JS & Co, Adamjee Insurance, EFU General and Life, Attock Refinery, PSO, Attock Petroleum, Shell Pakistan, Mari Gas, Millat tractors, and Engro Chemical were leading, which suffered a fresh sharp fall, ranging from Rs10 to Rs22.85.

But on the other hand, Fazal Textiles, and Unilever Pakistan managed to post sharp gains of Rs35.49 and Rs21. Shaheen Insurance, Javedan Cement, Dawood Hercules, Dreaqm2world and KSB Pump were some of the other leading gainers, up by Rs4 to Rs8.40.

Trading volume showed a modest rise at 161m shares from the previous 120m shares but losers held a strong lead over gainers at 271 to only 40, with 16 shares holding on to the last levels.

NIB Bank again led the list of actives, lower 722 paisa at Rs11 on 24m shares followed by Arif Habib Securities, off Rs4.99 on 9m shares, OGDC, lower by Rs1.80 at Rs123.20 also on 9m shares, Lucky Cement, down by Rs3.55 at Rs93.25 on 8m shares, D. G. Khan Cement, easy Rs3.30 at Rs62.71 on 8m shares, Pakistan Petroleum, off Rs8.59 at Rs251.16 on 6m shares, Bank Alfalah, lower by Rs2.13 at Rs40.47 on 5m shares and Engro Chemical, sharply lower by Rs14.50 at Rs275.55 on 4m shares.

KESC followed them, lower by 29 paisa at Rs5.20 on 6m shares followed by United Bank, off Rs4.54 at Rs86.40 on 4m shares.