Stocks slump to 18-month low

LAHORE - Continued foreign selling pressure, margin calls, political uncertainty and weak economic fundamentals on Wednesday dragged stock market down over 4 per cent to its lowest level for more than 18 months, as the KSE-100 index sank 467.99 points to settle at 10,491.88 level. Earlier, the benchmark index had closed at 10,425.46 level on Jan 12, 2007.

Dealers said that there was a net outflow of $14 million from the stock market on Tuesday, saying the market had already lost around 33 per cent from its high, loosing almost 1100 points without any technical correction. "Technical correction is due but selling pressure is delaying the correction process," observed Tariq Khurshid, Executive Director, First Pakistan Securities.

The KSE-index has shed 25.5 per cent since the start of the year and is 33.3 per cent lower than its life high on April 21 this year, another broker maintained.

He said that long-run market trend would remain negative till positive developments on political and economic fronts take place. Building of tension on borders is also casting negative impact on market. So overall trend was still bearish and market would remain bearish in near future.

Trading activity was seen in 273 scrips and out of those 25 closed in plus and 237 in minus column while 11 kept last rates.

Dealers said there were worries of another rate hike in the upcoming monetary policy due to be announced in the coming weeks.

The central bank raised interest rates to 12 per cent from 10.5 per cent in May which also put pressure on the stock market.

Market failed to sustain improvement in volumes and volumes saw substantial decline once again declining exit opportunity to small investors. Volumes dropped to 78.998 million shares in which WTL contributed volumes of 8.872 million shares as volumes leader.

From top thirty volumes leaders only one closed with plus sign against 28 minus while one kept last closing.

Dealers said investors perceived lack of clear strategy in government policies.

Foreign investors' losses have been compounded by 15.3 per cent depreciation in the rupee against the dollar so far this year.

The market has been adjusting since Monday after the relaxation of curbs on daily movements that had been tightened in late June to halt a precipitate fall in values.

From Monday, daily circuit breakers reverted to 5 per cent up or down, having been amended to 1 per cent down or 10 per cent up, in a move that stifled trading volume.

Free float index opened in minus column and in day long trading touched 11841.05 points low. This index also had closing marginally above its day low at 11844.56 points. It suffered massive loss of 572.14 points. All shares index went down 327.60 points and closed at 7608.18 points.

Among the most active companies, World Call Telecom fell 8.1 per cent to 11.34 rupees, NIB Bank fell 10.30 to 8.70 rupees, while Hub Power Co was down 4.28 per cent to 24.60 rupees.

The government has sought help from friendly governments to stave off the economic threats. Inflation has accelerated to a three-decade high above 21 per cent in June and the fiscal and current account deficits have widened to unsustainable levels, largely because of a soaring oil import bill.