Equity market declines 14pc

LAHORE - The equity market breached the 7,000 level and closed the week at 6,488 level with a decline of 14 per cent on Week on Week basis. With this weekly fall, the bourse is down 29.4 per cent since the resumption of normal trading from Dec 15, 2008, analysts said. Market capitalization of Karachi bourse closed at $ 25.7 billion down 12.5 per cent from last week and 28 per cent since the resumption of normal trading.
Volumes in the ready market remained relatively low with majority of the activity witnessed in the low priced stocks. Average daily volumes in the ready market were recorded at 55.0 million shares ($ 3.52 million) compared to 47.3 million shares ($ 1.42 million) its previous week showing an increase of 16 per cent.
Atif Zafar from JS Capital observed that some pressure on the market is expected to ease off, as according to newspaper reports, NIT has been directed by the advisor to the Prime Minister to enter the market on Monday.
Atlas Capital Market in a report observed that KSE-100 Index gained mere 4.22 points in the month of November 2008, starting from 9182.88 and closing at 9187.1 points. Market capitalization fell by Rs9.18m to PRs2,820.39b. Average daily turnover during the month of October 2008 decreased by 80.34% to only 0.14m as against .71m shares witnessed during the previous month due to the "index floor" implemented by BoD of KSE on August 27, 2008. Off market transactions increased significantly and most of the shares traded at 20% to 30% discount. The reason for the further delay in the removal of floor was non-availability of Rs20b market stability fund and Rs30b put option fund for foreign investors.
According to the data released by the National Clearing Company of Pakistan Limited (NCCPL), net outflow by offshore investors was $10.49m in November 2008 as compared to inflow of USD0.62m in October 2008. Average CFS rate over the month was 60.50% which touched as high as 88.08%.
Off-market activity increased in the outgoing week as normal trading entered its second week. The 13 per cent average discount in off market trades as off Friday's closing suggests that some further price erosion in the ready the market can be expected in the coming week. Off-market average daily volumes in the outgoing week were 12.9 million shares ($ 3.3 million) compared to 7.5 million shares ($ 3.1 million) showing an increase of 71 per cent.
On December 23, 2008, National Clearing Company of Pakistan Limited (NCCPL) suspended 32 of its clearing members as they had failed to fulfill their money obligations in accordance with the NCCPL regulations.
While in Money Market two T-Bills auctions were conducted in November 2008. In the first auction, the cut-off yield on 3-months, 6-months and 12-months increased to 13.5313% from its previous yield of 12.5973%. Auction for 6-months and 12-months T-Bills were rejected. Total participation in the auction was Rs56.77b of which Rs53.07b was accepted against the target of Rs80b. In the second auction, the cut-off yield for 3-month and 6-month further increased to 13.8549% and 14.0108% respectively. Auction for 12-month T-Bills were rejected. Total participation in the auction was Rs129.16b against a target of Rs75b of which Rs104.50b was accepted.