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."