A massive rise in the carryover volume to 28 million shares over preceding week seemed to have taken the steam out of market as fears of heavy unloading caused major dents in ruling prices, mostly of trend-setters.
But unlike previous weeks, there were no matching offers at falling prices as investors watched the situation on the carryover market before making fresh commitments.
Essentially, it was a consolidation move as investors adjusted their portfolios in the light of current central moves to limit bank investment in the Pakistan Investment Bonds (PIBs).
Selling in part was also attributed to the IPO of the Pakistan Petroleum which opens for public subscription on July 19 to 22. A section of investors lined up funds to invest in the PPL shares owing to its yield of over eight per cent.
The KSE 100-share index after an initial rise breached the 5,400-point barrier to quote at 5,388 as compared to 5,453.55 points. This wiped out Rs20 billion from the market capital at Rs1,455 billion.
Persistent rise in the PIBs yield in last couple of auctions worried the central bank on assumption that it could have a negative impact on share business. It took some corrective steps to check the outflow of funds.
"On an average, the yield on stocks is below seven per cent as compared to about eight per cent on the PIBs", said an analyst adding, "banks and general investors were not fools to stay in the share market".
The SBP, in its recent move sought investment details from banks on investment in shares which had recently touched new peaks. Some punters holding a bigger stake in the overbought bank sector offloaded long positions triggering sympathetic selling by others on overvalued counters.
A massive rise in the carryover volume to 28 million shares from an average 22 million shares during the last couple of weeks also worried investors as this could well mean unloading of long positions and a consequent pruning on overvalued counters.
"I don't think the current run-up is overdone", predicted an analyst, "the market is still to witness its highest level in coming weeks on the strength of positive news both on corporate and political fronts".
Essentially, it was a technical pause as investors liquidated their long positions on selected counters to square their outstanding dues up. But there was nothing wrong with the underlying sentiment, which remained uppishly inclined.
The KSE 100-share index, which had risen by about 200 points during the last two weeks could not break the barrier of 5,500 points as it did twice over the week but ended with a sharp correction owing to active selling in the leading base shares.
Profit-selling in some leading base shares, notably the PTCL and the OGDC pushed them in the minus column but there was nothing to suggest that bears could have an upper hand in a market awaiting higher dividend.
Technically speaking, the market generally takes a breather after a sustained rise as big ones adjust positions in the backdrop of positive and negative news from the corporate front.
Auto shares, which virtually raced towards their pre-budget inflated levels on Monday buoyed by new duty structure on the import of new and old cars, minimum being $4,000 on 800cc cars to be paid in dollar also took a breather.
Monday's price flare-up in auto shares was caused on reports that the imported stuff may not be cheap as was earlier considered and local assemblers will have an edge could not be sustained owing to selling at higher levels, brokers said.
Having a near-protected market, local assemblers were happy on the move to protect the interest of local auto industry. Auto shares were expected to rise in coming weeks, partly because of the strength of their corporate earnings, some others predicted.
"It was a great fight between the import lobby and the local assemblers and after a lot of post-budget manoeuvring, the latter finally won, although the general consumer may remain at the receiving end", analysts said.
But contrary to speculation, the price flare-up slightly slowed down amid conflicting reports about levies as some reports suggested it was meant for the overseas Pakistanis. While the HinoPak and the Al-Ghazi Tractors rose, the Pak-Suzuki and some others fell.
Although, minus signs dominated the list but some leading shares managed to put on fresh gains on strong selective support, prominent among them being the Rafhan Maize, Shezan International, Shell Pakistan, Bank of Punjab, National Bank, Mehmood Textiles, the EFU Life, Gillette Pakistan and several others.
Other good gainers were led by the Askari Bank, Atlas Battery, Ghani Glass, National Foods, Picic, Clariant Pakistan, and the ICP SEMF. Losers were led by the Rafhan Best Foods, Javed Omer, Siemens Pakistan and Fateh Textiles, followed by the Packages, Grays of Cambridge, Dawood Hercules, Gatron Industries, Al-Ghazi Tractors and some others.
FORWARD COUNTER: Speculative issues on the forward counter resisted large decline and finished on a mixed note, outstanding performer being the Pakistan Petroleum, up Rs6 followed by the PSO, which maintained the initial gain on active follow-up support.
The volume of both remained confined to the PPL amid alternate bouts of buying and selling ahead of the opening of its IPO next week. The OGDC, the PTCL, the D.G.Khan Cement and some others remained under pressure and generally ended lower amid slow trading.
