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| July 23, 2007 | Monday | Rajab 07, 1428 |
Suicide attacks batter stock market
Heavy buying in the oil sector followed by reports of approval of the new petroleum policy, and news that the CFS cap on well over three dozen shares may be removed shortly, halted the market decline at the weekend session as bulls were back in the arena at lower levels.
Although massive loss suffered by the market over the last week owing to series of suicide attacks and bloodshed may not be recouped just in one go, indications are that the restoration of the Chief Justice of Pakistan by the apex court, and some other positive developments on the corporate front, would allow the market to rise progressively from the current lows.
The price fall that was unprecedented on the blue chip counters may not be that easy to be wiped out as bulls are expected to move slowly in the prevailing tense atmosphere, notably the post-apex court ruling.
Earlier, the KSE 100-share index virtually crashed from its peak level of 14,202 points and plunged on panic selling originating from some big ones triggered by reports of series of attacks on security personnel.
The snap weekend rally has, however, raised hopes that the panic selling may be halted when trading resumes next week as is evident from the strong weekend rebound.
The KSE 100-share index, however, finished with a massive fall of well over 850.44 points or seven per cent at 13,351.79 points as compared to previous 14,202 eroding market capital by Rs284 billion. Its junior partner, the 30-share index, also crashed from its recent highs at 16,074, off 1,088 points.
The rout of the bulls was total as no one among the leading institutional traders ventured to cover positions at the lower levels. It was not a single factor but a combination of several, which did not allow investors, even the foreign investors, to take breather and all saw the market collapse helplessly from the sidelines. Even rescue operations from financial institutions were no where in sight.
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However, the two successive market crashes of 394 and 466 points on Wednesday and Thursday were not the largest single session fall. It had declined by 547.93 point or 5.88 per cent on June 14, 2006, on rumours of default of a member, 491.02 point or 4.43 per cent on March 8, 2006, and 468.20 points or 4.1 per cent on March 6, 2005, on President Bush’s visit to Pakistan.
“Investors have been holding on to their positions during the post--Lal Masjid army operation trading sessions on the hopes that the market might absorb the shock as was reflected by Tuesday’s rebound”, said a leading stock analyst Faisal A. Abbas. “But the series of attacks on security forces, claiming lives of dozens of personnel that followed unnerved them”, he added.
He said if the law and order situation further deteriorated in the coming sessions, some of the valiant bulls may also give in and could join the bandwagon led by bears.
The selling was broad-based and covered the entire list, with overvalued shares being on the hit list, most of which fell like the house of cards.
“The talk of emergency, later denied by the president, accelerated the pace of selling as some foreign investors joined the race of sellers”, analyst Ashraf Zakaria said. “In the developing law and order situation leading to political uncertainty, investors hate to make fresh commitments and prefer to shed extra load”, he added.
Another analyst Ahsan Mehanti said it was not the single negative factor, but a series of them which may further destabilise the market.
However, all was not bad with a broader market as some of the leading shares whose floating stock on the open market were short did rise under the lead of Fazal Textile, Wyeth Pakistan, Unilever Pakistan and some others .
FORWARD COUNTER: Barring Pakistan Petroleum and some others, which managed to finish around the previous levels or slightly above, all others remained under pressure and ended lower under the lead of OGDC, Lucky Cement, MCB, Bank of Punjab and National Bank amid relatively slow activity. — Muhammad Aslam
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