June 23, 2008	Monday	Jamadi-us-Sani 18, 1429

STOCKS last week ran into deeper recession as values of share fell like house of cards under the weight of foreign selling and the supposed market rescuers kept to the sidelines watching the onslaught of bear followed by a spate of lower locks on the counters of blue chips.

“The stakes in the share business are now much higher”, said an analyst. “Investors are now looking beyond the previous market crashes in the absence of aiding factors. It appears to be a man-made malady, and until sanity returns to the political manoeuvring and the rescuers come to the aid of the market, more tragic events may follow”, he added.

It was another terribly disturbing week for the investors as they lost billion of rupees in the bargains followed by a galore of negative news in quick successions never allowing them even a breather.

The KSE 100-Share Index posted a massive fall of 1286.28 points or 11.5 per cent at 11,655.28, eroding Rs396 billion from the market capital at Rs3,992 billion. Its junior partner, the 30-share index, suffered a bigger loss of 1870.76 or 17 per cent at 13,368.79.

The outflow of large amounts from the share business to other avenues of investment followed by the Afghan president’s threat of hot pursuit of militants inside Pakistan led to the crash of the market.

But threats scared both the foreign and the local investors as was reflected by a spate of selling offers but not many willing buyers amid daily lower locks in the overvalued shares owing to limit-fall.

Foreign selling gained in stature by each passing session as foreign investors were in a bit haste to liquidate their long positions, notably in the overvalued banking on reports of three per cent increase proposed in income tax from 38 to 41 per cent and oil after the world prices reacted from the all-time highs and the absence of demand even at the fall.

“The market should have absorbed external shocks on its in-built inherent strength but what aggravated the situation further was the political uncertainty and differences on some core issues among the coalition partners”, analysts said.

As a result, some tax relieves in the budget, including exemption on capital gains for another two years, were overshadowed by negative political developments, they added.

“Those who should have come to protect the interest of small investors at this stage seemed to be watching the market decline from the sidelines”, said analyst Ashan Mehanti. “All may not have gone mad at the time of need,” he added. Proposed increase in capital value tax, cut in refinery margins, and foreign selling again dominated the trading amid light turnover but major price changes in a market dominated by political uncertainty.

The massive decline in KSE 100-share index and the market capital during the current week, a colossal loss in value terms judged by any standard, is said to be beyond the scope of in-built safeguards to cope with such situations.

The breach of psychological barrier of 12,000 (career-best 15,776) is significant in more than one ways as it could pave the way for further erosion in the coming sessions on selling without matching buying, he added.

The successive lower locks in leading base shares, notably MCB, Engro Chemical, Pakistan Petroleum and some others signal the plight of the market and the future share business outlook, floor brokers said.

More than one reasons could be attributed to the current market worries by the analysts, but no one says how the regulators should react to meet the terrible situations, Ashraf Zakaria said. “It pains me to watch the collapse of a strong base built above 15,700 index level amid talks of 20,000 index level”, he added.

The fall was total but mainly confined to all pivotal, which still ensured capital gains but some of them were already heading towards saturation points amid fading buying offers even at the falling prices.

Forward counter: Leading shares on the cleared list followed the trend of their counterparts in the ready section and fell sharply lower under the lead of MCB, National Bank, Arif Habib Securities, Engro Chemical and many others.

Bank of Punjab, Bank Alfalah, Lucky Cement, OGDC, Pakistan Petroleum, Pakistan Oilfields and other leading shares also fell.—Muhammad Aslam.