KARACHI, Oct 26: The KSE 100-share index on Tuesday fell by 78 points on panic institutional liquidation on selected counters in an apparent effort to meet the deadline set by the central bank to correct their exposure limits by the end of the current month.

Both leading banks and financial institutions, which had built-up long positions in selected shares, notably PTCL and some others, liquidated heavily to meet the central bank deadline about the exposure limits. According to a leading analyst both of them were operating well above their limits, which caused panic-selling.

The central bank has directed the financial institutions and the banks to straighten their exposure limits by Oct 31, 2004 to 20 per cent of their total equity and five per cent in each share.

The KSE 100-share index plunged by 77.77 points at 5,390,35 as compared to 5,468.12 a day earlier as leading base shares, notably PTCL came in for massive selling. However, the shakeout is temporary and the market has risen to rebound on the strength of corporate earnings and profits in due course.

The market capital also suffered a sharp setback of over Rs20bn at Rs1,497.295bn as compared to Rs1,517.569bn a day earlier as all leading highly capital-bases shares including PTCL, OGDC and PTCL fell sharply lower.

It was a repeat performance as the KSE 100-share index early opened steady aided by higher profits by the National Bank, PSO and 25 per cent bonus and 25 per cent right shares by the Bank Alfalah but subsequent selling pushed it down to finish with sharp losses.

Larger decline was, however, resisted as anticipatory and speculative buying figured prominently on those counters which board meetings were due on Tuesday.

Askari Bank appeared to be again in the lead but it failed to add fresh gain to its overnight gain of Rs3.05 owing to selling by those who were in an overbought position in it. Others followed it.

But what seems to have enthused investor optimism was quarterly reports of OGDC and Pakistan Petroleum (PPL) on Wednesday and Thursday and pre-meeting feelers about their earnings reinforced investor confidence in the near-term market outlook, analysts said.

"The dividend-driven rally should have manifested itself in a bigger way in the form of index rise above the 5,500 point levels, terrible inconsistency in the trading behaviour of the financial institutions keep the market unsettled", they added.

Until institutional traders stop playing on short-term basis, the market may remain directionless and the small investors could well be the major victim in the fight of big ones.

"They storm the market on specific counters with buy-stops just at the opening bell and indulge in sell-stops towards the close, leaving others guessing whether or not to follow them", brokers said.

The next two sessions are very crucial for the future direction of the market as interim results of mega issues, notably OGDC and PPL are due on Wednesday and Thursday, with PSO and Shell Pakistan already in the fold, with higher profits, investors will have fair choice to chalk out their further line of action, brokers said.

Minus signs dominated the list on persistent selling, notable losers being Pakistan Refinery, Clariant Pakistan, Atlas Honda, Unilever Pakistan, Lakson Tobacco, which suffered fall ranging from Rs6.90 to Rs11 but the largest decline of Rs12.25 and Rs13.40 were noted in Millat Tractors, owing to perhaps to some negative reports of about its working results in Tuesday's meeting, and IGI Insurance.

Some of the leading shares managed to put on fresh gains under the lead of HinoPak Motors, Zulfeqar Industries, Ghani Glass, Shezan International, Valika Arts Fabrics, Berger Paints and Shell Pakistan, which posted gains ranging from Rs2 to Rs7.95.

Trading volume showed a modest increase at 235m shares from the previous 226m shares but losers forced a strong lead over the gainers at 220 to 67, with 44 shares holding on to the last levels.

PTCL topped the list of most actives, off Rs1.95 at Rs38.60 on 47m shares followed by Fauji Fertilizer Bin Qasim, up by 55 paisa at Rs20.90 on 44m shares, OGDC, off 75 paisa at Rs66.55on 33m shares, Askari Bank, lower Rs3 despite a higher earnings at Rs87.25 on 20m shares and National Bank, easy 60 paisa at Rs70.60 on 9m shares.

Other actives were led by Pak PTA, steady five paisa on 7m shares, Nishat Mills, lower 40 paisa on 6m shares, Bank of Punjab, off Rs1.10 on 5m shares, PSO, off Rs2.55 on 5m shares and Bank Alfalah, unchanged on 4m shares.

FORWARD COUNTER: PTCL came in for massive battering as banks unload long positions to meet their exposure limits, off Rs1.95 at Rs38.60 on 10m shares, PPL, lower Rs1.27 at Rs119.72 on 9m shares, OGDC, easy 56 paisa at Rs67.14 on 7m shares and PPL November contract, off 90 paisa at Rs120.85 on 7m shares.