September 5, 2003	Friday	Rajab 7, 1424

KARACHI, Sept 4: Stocks on Thursday came in for renewed selling as leading investors liquidated their long positions after the carryover rates swelled to about 18 per cent and fears of a possible default by some on the settlement day in the backdrop of higher volume. The KSE index fell by another 63.32 points at 4,464.78 and eroded Rs13.515bn from the market capitalization.

In a related development, increase in yields on T-bills at the latest auction worried investors as it could well mean outflow of funds from the share business to official instruments. Energy and auto shares received massive battering at the higher levels and led the market decline.

However, selling was well-absorbed at the decline, signalling that the current run-up is not overdone and the market could resume its upturn after meeting its technical demands being in a highly overbought position.

The KSE 100-share index fluctuated erratically under the cross-current of alternate bouts of buying and selling and finally finished with an extended fall of 63.32 points at 4,464.76 as compared to 4,528.08 a day earlier as all the pivotal remained under pressure. It touched the lowest and the highest at 4,458.93 and 4,550.69, respectively.

The total market capitalization also suffered a contraction of Rs13.515bn at Rs989.856bn as compared to Rs1,003.371 a day earlier.

“The breach of crucial level of 4,500 points on the lower side is a bad omen for those who have been predicting an index level of 5,000 during the next couple of months,” says a leading analyst commenting on its sudden u-turn. “But I don’t think bulls are get tired as yet.”

The declines was across-the-board and major losers were the high-profile shares, notably PSO, Hub-Power, PTCL, ICI Pakistan, Dewan Salman, but oil refineries were an exceptions, which maintained their upward drive on active follow-up support and rose further.

Hub-Power came in for active selling ahead of its board meeting and conflicting rumours about the final dividend and net profit for the year ended June 30, 2003. The company was to make official announcement about its final working results late in the evening.

Two negative factors seem to have halted the market’s sustained run-up and for good reasons too. Steep increase in carryover charges to a record 18 per cent triggered sellstop form those holding long positions fearing a possible default if the current run-up in rates continues and there are some problems on the clearing front.

“The increase of 38 and 53 basis points in the cut-off rates of T-bills for three and six months at 1.39 and 1.99 per cent may not necessarily signal the shift in the central bank policy to forestall further fall in interest rates,” analysts said, adding “no one could dispute that the rates have touched the bottom and the increase is attributed to counter market forces.”

But the rise sent shock waves among the stock traders who sold in a haste amid rumours that massive amounts of funds may outflow to the government instruments if the return on investment is fair there.

Although minus signs held a strong lead over the plus ones, some of the leading shares managed to finish further higher, major gainers among them being Aventis Pharma, Pakistan Cables, National Refinery, Pakistan Refinery, Rafhan Maize, Treet Corporation and Javed Omer, which posted gains ranging from Rs7 to Rs26.65.

Losers were led by Indus Motors, Pak-Suzuki Motors, Clariant Pakistan, Glaxo-SKF, Attock Refinery and IGI Insurance, off Rs7.05 to Rs9.90. PSO, Shell Pakistan, Honda Atlas, Clover Pakistan followed them, which suffered fall ranging from Rs5 to Rs5.50.

Traded volume was maintained at the overnight level of 605m shares but losers managed to force a strong lead over the gainers at 215 to 147, with 40 shares holding on to the last levels.

In the absence of market leaders, second-liners attract strong support as investors opted for low-priced ones as the chances of capital gains in them are more bright.

Japan Power, an undervalue share topped the list of most actives, up 35 paisa at Rs8.10 (face value Rs10) on 64m shares followed by KESC, higher by 35 paisa at Rs8.95 on 53m shares, Hub-Power, easy 75 paisa ahead of its board meeting at Rs43 on 48m shares, Bosicor Pakistan, lower by Rs2 at Rs39.70 on 46m shares and PTCL, off 90 paisa at Rs38 on 42m shares.

Other actives were led by Chakwal Cement, off 95 paisa on 38m shares, Maple Leaf Cement, lower one rupee on 26m shares, Pakistan Oilfields, off Rs3.50 on 26m shares, Pak PTA, firm by five paisa on 24m shares and D.G. Khan Cement, off Rs1.15 on 21m shares.

FORWARD COUNTER: Hub-Power came in for active selling and fell one rupee at Rs43,25 on 12m shares followed by PSO, off Rs5.90 at Rs283 on 8m shares, PTCL, easy 75 paisa at Rs38.40 on 7m shares.

Pak PTA fell by five paisa at Rs14.05 on 3m shares and FFC-Jordan by 65 paisa at Rs18.30 on 2m shares.

DEFAULTER COMPANIES: Easier conditions were again witnessed on this counter also as most of the active scrips followed the lead of ready section. Suzuki Motorcycles was, however, an exception, which rose by 75 paisa at Rs20.25 on 0.450m shares.

Standard Bank on the other hand fell by 25 paisa at Rs8.25 on 0.352m shares, while Biafo Industries was held unchanged at Rs9.30 on 0.308m shares.