THE single session trading volume on the stock market last week hit its all-time low at 5.349 million shares beating its early week’s 1.117m shares as investors kept to sidelines awaiting some positive news on the corporate sector.

Intervention by financial institutions to arrest the persistent fall failed. Till the end of the week there was no change in investors’ psychology and they let the market fall each session pretending that they had no appetite for fresh stocks. Enough is enough.

Analysts cited more than one reasons for the current stalemate including turmoil on the currency markets, weak economy and FATA operation. Some of them said the lower cap of one per cent appeared to be the main factor behind the impasse.

“Restore the previous lower cap of five per cent, the turnover figure will rise from the current all-time record lows after due price adjustment”, they said.

Owing to the prevailing uncertainty, the share market witnessed the outflow of huge funds to other profitable outlets, mainly gold and US dollars as investors were near-mad in search of safe havens worried over the creeping decline amid falling demand.

The KSE 100-share index was off 391.53 points at 11,961.66, from the previous 12,353.19, eroding Rs105bn from the market capital at Rs3,690bn. Its junior partner, the 30-share index, suffered a fall of 596.62 points at 13,852.52.

As a matter of fact, the market was saved from a total collapse thanks to the timely step taken by the Security and Exchange Commission of Pakistan (SECP) by lowering the lower cap from the previous five per cent to one per cent, which limited the daily fall.

An idea of market’s nervousness and lack of support may well be had from the fact that the daily volume figure hit an eight-year low at 11.117m shares and analysts said it could fall further as investors were not inclined to cover positions even at the current levels.

Prices changes were, therefore, mostly fractional but the cumulative loss over the week in most of the leading shares was fairly sharp, reflecting the exit of foreign interest probably at a loss.

The investors were already worried over the outcome of security forces operation in FATA. US claim that it could hit known targets inside tribal areas, though denied by officials, scared the investors and hastened the market fall.

The turmoil on the currency markets after the rupee fell to 70 a dollar further accentuated the situation in the share market as investors played safe awaiting official intervention to forestall fresh price erosions.

The single-session trading volume fell to an all-time low of 5.349 million shares amid slack demand. The previous single-session turnover was hit at 15.141m shares on Sept 3, 2001, after the implementation of T-3 trading system on the KSE.

The sluggishness reflects the market is heading towards a major crisis in coming weeks if law and order situation does not improve and investors seek other avenue of investment.

Stocks, therefore, ended the last financial year on a subdued note as leading investors remained conspicuous by their absence owing to the presence of more than one psychological depressant.

After opening unchanged at the previous weekend level of 12,353.19, the KSE 100-share index steadily declined to the week’s low of 11,961.66 despite stray late covering purchases in some leading base shares including MCB and OGDC.

“Although leading investors kept to the sidelines most of the time for obvious reasons, there was no panic selling from any quarter”, analyst Ahsan Mehanti said adding “everyone is awaiting some good news, which are not around”.

It was in this background that the KASB Securities made a firm provisional debut at Rs77.17 (face value Rs10 at a premium of Rs57.50 per share), but ended lower at the week’s low of Rs66.02 on late selling owing to prevailing uncertain conditions.

“In the backdrop of ongoing operation in the tribal areas, tight money supply position, and a weak rupee investors think twice to go for fresh stocks”, said an analyst Hasnain Asghar Ali.

He said the lowering of low cap to one per cent seemed to have earlier protected the market from a total collapse in the unfolding geo-political scenario and the absence of financial support but later it failed to stem the decline.

“If all goes well on the political and national security fronts, the market could rebound from the current low on the strength of higher corporate announcements for the financial year ended June 30, another analyst Ashraf Zakaria predicts. But for the time being the market lacks even normal support as investors are out to get out of it instead of making fresh commitments even at the current lower levels, he added.

Most of covering purchases were confined to low-priced shares where the risk of further fall and gain was low as a section of investors just marked time rather than making genuine buying.

Forward counters: Speculative issues on the cleared list also followed the lead of their counterparts in the ready section and fell sharply lower under the lead of PSO, OGDC, MCB, National Bank, Pakistan Oilfields, Pakistan Petroleum and some others.

—Muhammad Aslam