|
|
|
| December 18, 2006 | Monday | Ziqa'ad 26, 1427 |
STOCK EXCHANGE: Bourses reel under negative news
THE Karachi Stock Exchange passed through terribly-low daily volumes last week as negative news which followed in quick succession did not allow investors to have an overview of the developing situation on corporate front. They mostly kept to the sidelines.
The news that the data on `brokers share booking’ which caused the March 2005 stock market crash was missing from computers of the relevant quarters. This gave a new turn to probe issue but the National Assembly Committee appeared to mean business and had directed them to provide details by next week.
The Committee was also of the view that the forensic probe report was silent on many relevant issues linked to the crash, including who was responsible for manipulating the prices.
Therefore, the physical activity last week remained sluggish as leading investors and financial institutions withdrew to the sidelines, leaving in its wake, terribly low daily volumes.
The KSE 100-share index finished with an extended decline by falling well below the week's high level on late profit-selling in leading base shares, including the National Bank, the MCB and some oil giants. It ended lower by 10 points at 10,551.87 as compared to 10,561.97 points, a week earlier.
Click to view the larger image
The market may not be in a developing crisis but the current sluggishness raises more than one questions, including another attempt by those who may have been involved in price manipulation to halt the logical process, some analysts believed.
The general view was that the forensic probe report did not properly investigate the issue which washed away around $13 billion from the savings of investor he said, adding that it needed fresh examination by the official committee.
That was perhaps why the year-end buying which should otherwise have had made big showings was conspicuously absent on the fears of some negative impact of the current probe, some others said. After fluctuating either-way earlier, the suspension of trading in the shares of Callmate Telips by the SECP on violation of 30 per cent bonus issue haunted the investors.
Trading resumed in the backdrop of the IMF's positive comments on Pakistan's economy but suggestion to devalue rupee by 10 per cent and an increase in interest rates to cut current account deficit warned investors to play safe and refrain from going beyond the protected financial limits, analysts said.
The IMF recommendation had raised more than one question about the strength of the rupee but how the government checks the widening trade imbalance and adopts strategy worried a large section of the brokerage houses, stock analyst Faisal A. Rajabali said. He went ahead to say that this could curtail market activity in the coming sessions.
Hasnain Asghar Ali, a leading analyst however feared that despite central bank’s denial to devalue the currency, confusion still prevailed in the market as leading investors could not precisely digest the negative fallout of the IMF suggestions.
The rupee was certainly weak against major currencies but there were other reasons behind its weakness which the central bank seeks to redress by taking some corrective measures, he said.
Foreign investors who made bigger showing in oil and banking sectors during the last couple of weeks will however remain on the sidelines at least until next month, Ashan Mehanti, another analyst predicted.
FORWARD COUNTER: Unlike the ready section where blue chips ended lower on active selling, leading shares, notably the MCB, the OGDC and the Pakistan Petroleum managed to finish with modest gains on strong mid-week short-covering.
But on the other hand, the Pakistan Oilfields and some other leading shares came in for active selling at the fag end of the week and finished modestly lower on profit-taking.
|
|
|
|
