KARACHI, Aug 5: The recent upward drive was halted on the stock market on Tuesday as investors took profits at the inflated levels but the bulk of the technically-inspired selling was well-absorbed at the dips, notably on the blue chip counters under the lead of energy shares.

Apart from long overdue correction in a highly overbought market, selling was also prompted by reports that the KSE has issued exposure notices to some of its members under the new valuation rules to be effective from Aug 11.

The KSE 100-share index finished with a decline of 35.05 points at 4,010.34 as compared to 4045.39 a day earlier after opening higher but the mid-session profit-taking, a judicious combination of both technical and hasty selling pulled it down. Market capitalization also fell by Rs7.732bn to Rs893.418bn.

However, the fact that it managed to close above the crucial level of 4,000 points signals that bulls are not inclined to be overwhelmed by nervous selling both from the retailers and some leading bears.

“There is a apprehension among the brokerage houses that under the new valuation rules, prices of their shares deposited as exposure margins, will be reduced calculated on the basis of last 52 weeks lowest rates and hence selling,” says a leading stock analyst.

But I don’t think bears have the guts and the money to absorb the falling stocks in the presence of strong institutional support, notably at dips, he says adding “no one could deny the fact that the market is in a highly overbought position and needs correction but not yet.”

The general perception is that the index could take a breather after having tested its near-term target of 4,500 points aided by expected higher dividend announcements from the some of the leading companies including ICI Pakistan whose board met on Tuesday (Aug 5).

A section of leading investors is also awaiting the details of the new constitutional package to be discussed between the MMA and government teams possibly tomorrow.

“Much will depend on the consensus or otherwise on the package and whether or not it meets the demand of the opposition on LFO and the president’s uniform,” brokers said.

But those who are essentially operating on the strength of corporate background news and the strong presence of the financial institutions are not in a mood to entertain bearish ideas or to be influenced by the political undercurrent and its negative impact on stock trading, they added.

Reports that final bidding date for the PSO sell-off will be announced in October prompted active profit-selling in it, pushing its share value from the current highs of Rs310.00 to Rs304.50 and so did some other leading energy shares and blue chips on the other counters.

After several weeks of persistent rise, losers managed to force a strong lead over the advancing shares, major losers being Sapphire Fibre, Al-Abid Silk, Shahtaj Sugar, Lakson Tobacco, Pakistan Oilfields, Pakistan Refinery, National Refinery, PSO, Shell Pakistan, Nestle MilkPak, Javed Omer and Unilever Pakistan, which suffered pruning ranging from Rs4 to Rs23.50.

Advancing shares were led by Central Insurance, Jahangir Siddiqui Co, IGI Insurance, Pakistan Resource Co, Pakistan Gum Chemicals, Pakistan Services, Shell Gas, Atlas Honda, Attock Refinery and Rafhan Maize, which posted gains to the extent of Rs4 to Rs10.

Trading volume fell to 477m shares from the previous record figure of 668m shares as losers maintained a strong lead over the gainers at 300 to 114, with 48 shares holding on to the last levels.

Hub-Power again topped the list of most actives, lower 30 paisa at Rs41.05 on 85m shares followed by the PSO, sharply lower by Rs5.75 at Rs304.50 on 54m shares, Maple Leaf Cement, higher by Rs1.50 at Rs25.15 on 38m shares, PTCL, easy 30 paisa at Rs33.05 on 27m shares and Sui Northern Gas, up 40 paisa at Rs36.70 on 33m shares.

Other actives were led by ICI Pakistan, whose board meeting was held on Aug 5, higher by Rs2.05 on 23m shares, WorldCall up 50 paisa on merger news with Worldcall Payphones, on 21m shares, Japan Power, firm five paisa on 19m shares, Dewan Salman, lower 15 paisa on 17m shares and Pakistan Oilfields, off Rs4.60 also on 17m shares.

FORWARD COUNTER: PSO also came in for active selling on this counter followed by report that its final bidding date will be announced in October, off Rs3.25 at Rs308.50 on 22m shares followed by Hub-Power, easy 15 paisa at Rs41.60 on 12m shares and PTCL, off 40 paisa at Rs33.25 on 5m shares.