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| August 20, 2007 | Monday | Sha’aban 6, 1428 |
Stocks tumble on foreign selling
FOREIGN selling dominated the trading on the share market during the previous weeks as investors followed the trend of falling world bourses and did not opt for short-covering even at the attractive lower levels on selected counters.
In between, the market witnessed attempted rallies aided by active institutional support but failed to go through on profit-selling at each rise. However, revival of demand at the weekend on some of the counters, notably banks and insurance raised hopes that the current downward drift may be overdone.
Stocks, therefore, suffered fresh pruning across the board as both leading investors and institutional traders kept to the sidelines most of the time and did not opt for short-covering at the attractive lower levels owing apparently to political uncertainty.
The KSE 100-share index remained under pressure despite attempted rallies and finished with an extended fall of 314.92 points at 12,698.04 as compared to 13,012.96 a week earlier.
Corporate announcements, including bonus share by Faysal Bank and Glaxo-SKF (interim) at the rate of 25 per cent, and cash dividend, and bonus shares by Jahangir Siddiqui & Co at the rate of 25 per cent and 100 per cent respectively were on the higher side of the analysts’ predictions but they came at a time when investors were worried over the developing political situation.
Analysts said what seemed to have accentuated the situation was reports of foreign selling on some of the counters which attracted sympathetic local un-loadings and prices fell as there was no matching buying at the falling prices.
Market talks of persistent foreign selling on the banking, oil and cement sectors, therefore, dominated the trading throughout the week as local investors did not take positions at the falling prices apparently awaiting next moves of the foreign investors.
“Some of the leading local investors prefer to swim and sink with foreign investors and await their return in a falling market rather than covering positions at the lower levels”, said Ahsan Mehanti, a leading analyst.
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Floor brokers generally measure the presence or exit of foreign support by the SCRA (Special Convertible Rupee Account) figures released by the central bank each bank and follow their lead.
The KSE 100-share index breached through the barrier of 13,000 points and analysts predict the bear onslaught may continue in the coming weeks also in the absence of leading investors.
The decline was again led by banking and cement sectors, which in unison encountered heavy selling as a section of investors tried to cash in on the available margins of profits owing to developing situation on the political front, floor brokers said adding the selling in part was also attributed to Independence Day holiday.
“The market rout was total as investors, including financial institutions, were not inclined to launch a rescue operations even at the falling prices”, said a leading analysts adding “but rather some of the institutional traders were sellers on the high profile sectors”.
The falling daily turnover figure also reflected that all was not well on the market front as there were more sellers than buyers amid conflicting reports about the political situation prevailing in the country, they said.
“What worries local investors is the progressive exit of the leading foreign funds as they are not sure about the future outlook of the share business”, another analyst said.
Heavy selling in the leading bank shares, including MCB, National Bank, Bank of Punjab and Lucky Cement, signals that the worst is still to come as leading stakeholders are getting out of their long positions amid reports of a massive political showdown. But some other analysts said the market could fall another 500 points in the prevailing uncertainty, but ruled out further fall beyond the index level of 12,000 points, which could well prove a strong resistance point on the strength of the higher corporate announcements.
FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterparts in the ready section and generally fell where changed barring some modestly traded shares.
Major fall was noted in MCB, National Bank OGDC, Bank of Punjab, Askari Bank, Pakistan Petroleum and some other overvalued shares.—Muhammad Aslam
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