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| May 1, 2006 | Monday | Rabi-us-Sani 2, 1427 |
Shares suffer battering as selling intensifies
THE KSE 100-share index last week suffered massive battering as leading base shares came in for near-panic selling triggered by reports of some clearing problems on the forward counter and below-the-market dividends announced by some leading companies.
What was more disturbing was the absence of both institutional and foreign buyers at an attractively lower level which in turn hastened the market crash amid low volumes.
The stocks, took a massive plunge from their all-time peak levels on hasty unloading by all and sundry followed by a strong whispering that the leading foreign investors were on their way out after unloading long positions on oil and bank sectors.
Confusion followed the whispering and consequently creating panic, notably among small and genuine investors after prices of blue chips fell like nine pins from their record high levels. The fall appears to be psychological as it was not matched by the unloading or buying, even from bargain-hunters and speculators.
The KSE 100-share took a massive plunge of 665.43 points or about eight per cent at 11,342.17 points eroding Rs187 billion from the market capital at Rs3.198 trillion.
None could deny the fact that the market after having hit its all-time peak index level of 12,237.00 was in an overbought position and needed correction which was apparently delayed in anticipation of higher interim dividend by some leading companies.
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But analysts predict the worst may be over as the market could respond positively to its basic fundamentals by next week despite heating up of the political scenario.
Most leading shares, notably in banking and oil sectors are now within the buying range and those who have suffered massively in the rollover week may have a chance to recoup in part their losses, they added.
Although, the board meetings of some leading companies were held amid predictions of higher corporate earnings, the market probably failed to digest the sharp decline of 28 per cent interim after-tax profit of the PTCL.
It lost Rs8.50 during the post-result sessions and being one of the leading base shares, it dragged down the entire market to a massive fall. Incidentally, the current Rs54.30 is the lowest in the last couple of years as it has fluctuated between Rs57 and Rs104, prior to the sell-off.
The nine-month PTCL earnings after the Dubai-based Etisalat took over the management control of telecom giant in local typical conditions is considered a bad omen, while investors are expecting a big boost to its share value in the post-takeover trading, analysts said.
The perception that the higher corporate earnings pouring in each session would put the market back on rails but its highly volatile performance reflects that some bad news may be around - sans the basic fundamentals, they added.
The overvalued oil giants, notably the Pakistan Petroleum and the Pakistan Oilfields being index-heavy weights also suffered sharp fall and so did the cement shares despite inauguration of the Basha Dam by President Musharraf on 26th of this month. Though this could increase the demand of cement but the duty-free imports worked against the entire sector.
The bull-bear standoff appeared to have reached its logical end as the former outwitted the latter on most of the fronts followed by the revival of selective foreign buying at lower levels.
Investors carefully watched the developing situation on political front after the meeting of two former prime ministers, Benazir Bhutto and Mian Nawaz Sharif in London and its impact on local politics in the months preceding the national elections next year, some analysts said.
But how the market and the corporate sector will react to future implications of the consensus politics is pretty difficult to assess at this stage, they added.
Cement, oil and bank sectors, which have been the target of strong profit-selling during the last couple of sessions, came in for active short-covering and took along with them the other blue chips on higher side, they added.
The return of the bearish market reflects that the investors are worried over the rollover week apparently on perceptions that the squaring of positions may not be that smooth, predicts a leading analyst adding the market crash at the fag end of last week was in line with their predictions.
FORWARD COUNTER: Speculative issues on the cleared list followed the lead of their counterpart in ready section and after early rise fell sharply lower under the lead of Pakistan Oilfields, Pakistan Petroleum and the OGDC amid persistent selling.
Other leading shares, notably the National Bank, the PTCL, the Lucky Cement, the D.G. Khan Cement, the PSO, the Shell Pakistan and several others also finished with sharp fall amid active selling followed by the reports of squaring up problems in some.—Mohammad Aslam
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