Stocks roar to biggest gains in history

LAHORE - The Karachi bourse on Tuesday made a history by taking a sudden leap of about 960 points first time in the history of the KSE after the Stock Exchange management reduced the limit of lower lock and relaxing the upper lock restrictions following a huge loss of over four per cent suffered by the main index in single day trading on Monday, dealers said.

The stock already had faced a slump of about 29 per cent in nearly two months, 10 per cent fall just in one week, the steepest drop in three years mainly on political concerns.

The Karachi Stock Exchange benchmark 100-index rose by 8.6 per cent, the biggest average-wise climb since May 24, 2002. If the increase is measured in view of points, the market achieved highest-ever gain of 960 points in the history of local bourse to close at 12,122,68 levels, one day after the market fell 4.2 per cent amid concerns about interest rates, inflation and ongoing political uncertainty, said Aqeel Karim Dhedhi from AKD Securities.

Market opening proved to be the market low and index throughout the day moved in upward direction. Bullish sentiments were so strong that most of the blue chips attained 5 per cent gain in first hour of the trading.

On Monday night, the exchange formulated new rules, allowing the stocks to only fall by 1 per cent or to rise by 10 per cent before suspension of trading to control the losses. Previously, stocks were allowed to fall or rise by 5 per cent. The management also banned short selling and announced a planned fund to halt slumping prices.

Ahmed Nabeel, an analyst at JOVC, said it was record single day gain ever made in the history of KSE. He said the measures boosted investors' confidence, as the buyers' position is now stronger because they face only 1 per cent risk on their purchase.

However, another analyst at Karachi-based brokerage house said the measures would not change the economic factors in the country and would not have long-term effect.

Dealers said the foreign investors have slashed their spending on local stocks to $62.2 million in 11 months ended May 31, from $1.76 billion a year earlier.

The country's political instability increased on Monday when Lahore High Court barred former Prime Minister Nawaz Sharif from running in parliamentary by-elections.

The country is also confronting with a host of economic problems, including yawning budget and current account deficits coupled with constant power shortages and ever-increasing inflation.

An expert from First Pakistan Securities was of the view that stability measures taken by the SECP helped the market reverse the declining trend. Most of the blue chips closed with 10% gains at their upper locks. Though market short-term trend has turned positive but long-term view is still negative till the solid improvement on political front. In all probability market will keep the upward trend in near future," he added.

Free float index closed after daylong upward drive at 13969.56 points plus 1219.28 points after hitting day high of 13973.24 points.

All shares index gathered 663.72 points and closed at 8702.11 points.

Out of 340 traded scrips 304 closed in plus and only 26 in minus column while 10 remained unchanged. Turnover also improved and 183.854 million shares were traded.

OGDC topped the volumes leaders list with traded volumes of 16.502 million shares and closed limit up after gaining rupees 11.70. From top thirty volumes leaders only one closed with minus sign while most of the remaining scrips closed at their upper circuit breakers.