Market remains in grip of bears for eighth day

KARACHI- Karachi Stock Exchange for eighth day in a row remained bearish and shed another eight points due to economic weaknesses, deteriorating law and order situation and cut in Pakistan's rating.

However, the benchmark KSE-100 index opened on Wednesday in green zone with positive 0.65 points and at the end of the day closed at 9190.75 with a loss of 8.76 points.

The free float KSE 30 index fell 0.42 points and concluded at 10,064 points.

The ready market turnover showing miserable situation by standing at 2.792mn, reflecting a decline of 3.14 mn shares. Whereas Future market volume however increased and stood at 6.635mn shares.

Analysts said that the continued economic weaknesses, as depreciating value of rupee against dollar and the fall of forex reserves below the $8.91billion mark have already shattered the investor confidence, in addition to this, Moody's verdict on the Pakistani bond has further dampened the buying interest of local investors as well as foreign investors.

The FIPI data showed that foreign remained sellers on Wednesday, as their net selling turned negative to 0.27 million dollar.

Floor brokers lauded the step of KSE board and said that the market could have run into a deeper recession in the backdrop of pouring negative news but extension of shares prices freeze and floor on the KSE 100-share index had saved them from any catastrophe. Analysts said that investors remained concerned over law and order situation in the country, economic uncertainty, and high interest rate environment coupled with on the fate of liquidity to be provided of Rs20bn by State Bank of Pakistan in the capital market Mohammed Sohail head of research at JS Global said that since last few days there has been sharp increase in the annualized rates of Continuous Funding system(CFS). Similarly yield on Pakistan's sovereign dollar was once again increasing, especially after Moody's cut on Pakistan's B2 outlook to "negative".

Sohail said that both these trends indicated that investors felt that their funds would not be safe, thus they were reluctant to invest in CFS and Pakistan dollar bonds, he said and adding that both these were negative news for the financial markets of Pakistan which are already under stress since last many months.

Mohammed Sohail pointed out that as the KSE Index down 41 per cent from its peak, the funding requirement through CFS has also fallen from Rs55bn to Rs15bn, a drop of 73 per cent. Logically low funding needs should result in lower CFS rates. However, totally opposite trend was observed and on Tuesday weighted average CFS rates jumped to 3 year high level of 24.4 per cent. Infact in few stocks like AHSL, NIB, etc. CFS rates went close to 50 per cent also. This signal that lenders were withdrawing their funds amid fear of settlement issues once the market comes down after the likely lifting of price freeze mechanism.

NIB Bank like previous days remained volume leader today also and its shares rising by Rs0.77 closed at Rs11.25. OGDC losing Rs1.74 closed at Rs117.65, while Arif Habib

Securities soared by Rs5.24 winded up at Rs141.95. Turnover today aggregated to 180 million shares higher by 45 million shares as compared yesterday.

The overall Market Capitalization ended at Rs.2.85 trillion, showing a decline of Rs3 billion. While a total of 86 scrips were traded today, out of 9 advanced, 19 declined and 58 ended unchanged.

Highest volumes were witnessed in ENGRO at 1.060mn shares, its shares lowering by 23 paisa and closed at Rs.180.44 followed by Siddiqsons Tin (STPL) at 0.218 mn shares, remained unchanged at Rs. 14.50. JSCLR at 0.218mn shares, its shares declining by 3 paisa at Rs.0.05.