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| December 25, 2006 | Monday | Zilhaj 03, 1427 |
STOCK EXCHANGE: KSE index plunges on uncertain outlook
THE KSE 100-share index crossed through the psychological barrier of 10,000 points last week and was last quoted at 9,894 points despite positive news from the corporate sector.
Investors were keen to get out of the market amid the panic created by some technical factors, including overleveraging and the absence of financial support.
But what seemed to have had intensified the market worries were the reports of foreign selling in some leading oil shares which fell across the board despite reports of new oil and gas finds by the Oil and Gas Development Company.
Unlike the previous December, this year it was a terribly bad month for the bourses as stocks suffered massive and successive falls on negative news followed in quick succession, never allowing the investors to have an objective overview of the developing situation and how to react to it.
After abortive bids to stay above the crucial level of 10,000 points, the KSE 100-share index breached through the psychological barrier and was last quoted at 9,893.99 points as compared to the previous 10,551.87 points, off 657 points. This eroded Rs179.bilion from the market capital. The 30-share index followed it but stood firm above its base level of 10,000 points.
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On top of these was a massive rise in the leverage positions - above the ceiling of Rs35 billion at Rs37 billion on the CFS counter - triggered selling from big ones which was aimed at clearing the outstanding dues.
Analysts said that the leading investors and brokerage houses decided to keep to the sidelines until the mess was cleared. Few unloaded their long positions where ever possible.
None had the courage to stay on his wicket and was not lured by the strength of the upcoming higher corporate announcements by some leading sectors whose financial years were to end on December 31, 2006, they said.
The stocks, therefore, fell across-the-board on heavy selling by the punters in leading base shares linked to the rollover week to clear the outstanding position in maturing future contracts. However, there was support at the dips.
After hitting early, the week's high of 10,572.50 points, the KSE 100-share index posted a decline and so did its counterpart 30-share index.
All leading base shares, some around their lower locks finished sharply lower. Major losers were the National Bank, the OGDC, the MCB, the Pakistan Petroleum and the Pakistan Oilfields which was in the forefront of losers.
Owing to the absence of many exit routes amid falling daily volumes, investors had no option but to offload their long positions on the overvalued counters to settle their forward positions, analyst Hasnain Asghar Ali said adding that as there were not many buyers even at lower levels the decline was intensified.
Fresh developments on the forensic probe report and an allied demand made by the National Assembly Committee on the SECP and the KSE took its toll as it added to the prevailing uncertainty among foreign investors. Attractively lower levels of leading shares failed to lure them despite potential of higher capital gains.
The market which was a victim of falling demand during the last couple of weeks greeted the advent of rollover week with a bad mood which was due to the absence of strong financial and foreign support, he said. A terribly low daily volume of well below 100 million shares allowed hardly any room for even the most shrewd brokers to play safe and most of them therefore, kept to the sidelines.
Although there were chances of default on the part of any broker, the rollover week could take away the steam out of the market generally powered by the year-end buying which now was nowhere to be seen, another analyst Ahsan Mehanti said.
FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterparts in ready section and fell sharply lower. Major losers among them were the National Bank, the MCB, the Pakistan Petroleum and some others. Some of these suffered lower locks more than once.
However, analysts predicted revival of support at the current lower levels during next week as all blue chips had the potentials of higher capital gains.
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