Bears rule stock market

LAHORE - The stock market, which remained opened only for four days during the week on account of Eid holidays, remained in the grip of bears due to less-than-expected interest rate cut and political uncertainty caused by the NRO. The KSE 100-index lost 99 points and closed at 9,206 points
Pre-Eid week remained negative as only 12 points could be added in the bourse within two days when 11 points were added on Tuesday while only one point could be added on last day of the business week on Thursday. Likewise, the equity market remained negative when it shed 84 points on Monday while on Wednesday it lost 29 points. All in all, the Karachi Stock Market shed 99 points during the week to close at 9,206 points as the KSE started its business week with 9,305 points and ended at 9,206 points.
The KSE could not sustain surge spree during the last business week mainly due to less-than-expected reduction in discount rate announced by SPB and political uncertainty on the back of NRO lapse. Fall in international oil prices and investors concerns over circular debt issue affecting oil refineries cash flows played a catalyst role in negative sentiment.
Absence of buyers during week forced low volume price erosion in the expensive stocks and the benchmark went tumbling down. While economic concerns, such as high government borrowing, growing liabilities ($55 billion), reservations regarding achieving revenue and export targets and likely rising trend in inflationary pressures witnessed the KSE in steep decline.
Prior to Eid holidays, intense selling pressure phenomenon put the local bourse to start the week in red digits while SBP move to keep discount rate to ignorable change of 0.5 per cent in its monetary policy resulted in panic offload by nervous investors. In fact, the stance of SBP authorities of not opting for regulatory changes to support the liquidity injection invited investors to get jitter who were expecting the equity would surge. While, turnover recorded at 79.458 million shares reflecting downward trend.
The KSE started its week on Monday when benchmark witnessed bearish trend and the KSE 100-index shed 84 points to close at 9221 points.
The 100-index opened in red zone with a loss of 1.26 points and closed at 9221.96 with a loss of 84.40 points at the end of the day. The KSE 30-index closed at 9741.21 with a loss of 84.69 points. Trading activity was minimal as compared to the last trading session as the ready market volume stood at 76.070 million.
Though Tuesday remained an extremely dull and dry session, however, the benchmark index remained positive and maintained its stance till closing bell, adding 11 points to close at 9,233.70 points.
With majority participants on sidelines mainly due to polluted environment ahead. Moreover, meagre turnover was observed as volumes were down by 1.32m shares as compared to Mondays session.
On Wednesday, unexciting behaviour of the local equity market continued to hamper investor sentiments and kept them at bay as the KSE-100 share index shed 29 points to close at 9,204 levels.
Mere 50bps discount rate cut was the main reason of this decline. The KSE would have recovered more, had the discount rate cut been greater than the expected 50bps. Trading activity was slightly better as compared to the last trading session. The ready market volume stood at 82.421 million shares on Wednesday as compared to last trading session 74.754 million shares.
It was a flip-flop phenomenon on Thursday, the last working day, as mixed activities at the KSE resulted in nominal change on board ahead of Eid holidays. Benchmark 100-index added only one point to close at 9,206 levels.
Sluggish opening pushed the index into the negative territory, wherein the index heavy weight OGDC played a major role. Trading activity was further improved to 84.660 million shares as compared to last trading sessions ready market turnover of 82.421m shares.