New consortium fails to boost stock market

KARACHI - Setting up of a consortium of core brokers and top Govt's companies would not bring the stock market back on rails unless the government takes the lead in creating confidence among investors by taking a number of positive steps. This is the considered view of the brokers of the stock market who drew the attention of sudden slum of around 217 points, which they argued that the setting of consortium could partially help but the main help should come from the government in shape of measures that will restore the confidence. The rumours floating in the market that the government was thinking of further increasing discount rates, increase in capital value tax and foreign selling were the major reasons which dampened market sentiments. Thus, KSE-100 Index has reached at 63 week low of 11,655 levels on Friday.   Another major factor negatively impacted the market is political uncertainty the government has to work both on political and policy making planks if it wanted to contribute in lifting the sluggish trend in the market. Brokers were of the opinion that the setting up of the consortium was a wise move but it cannot deliver overnight and would take some time to take the market along, it may partially restore the confidence but would not be entirely helpful in the long run. Consortium certainly helped and it was reflected in  today's trading but it was not as strong as it was expected. The market was anticipating aggressive buying but contrary to the expectation it was more value buying though the stocks were on the buying block but they were few buyers around. Brokers said there was no truth in the rumours that the consortium had the capacity to invest around Rs70 billions but this was not true when the market opened, the consortium has some capacity between Rs7 to 17 billions and not more at the moment because market has suffered huge losses. The brokers said that last few weeks the market was constantly suffering and it was not possible for a miracle to happen, the market will pick up on slowly notch by notch and will not shoot up like thermometer mercury. Despite the formation of a consortium to invest at stock market, the negative sentiment continued to grip the stock market. Core brokers, investors and some financial institutions have formed consortium in order to bring back the bullish sentiment in the market and to give support to the market, amid current unabated trend of decline in value and volume of the equities. Sources said that foreign selling that was witnessed through out the day across the board has shattered the confidence of such consortium. Foreign selling of US$23 million during outgoing week further support bearish sentiment in the market. As a result, huge selling was observed across the board with banking sector plunging by 14.1%, cement by 11.4%, fertilizers 8.9% and E&P by 7.4%.

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