KARACHI: Stocks drifted lower on the opening day of the week with the KSE-100 index closing down by 74.00 points at 28,493.74.

As was expected, the optimism fuelled by the Army acting as facilitator in the stand-off between the two political parties and the government died down over the week-end.

The capital city saw escalation of protests that turned violent for the first time after a confrontation between the police and the protesters.

Investors were disturbed by the gory images on TV channels and wondered where all of that would lead to? Yet, the market showed its resilience as the index quickly rebounded after an initial drop by 388 points to intra-day low.

Foreign investors, who had supported the market with net purchases of $10.71 million worth stocks on Friday, were net sellers of shares valued at $0.56m on Monday.

Mutual funds also continued to take profit with sale of $4.17m, while high net worth individuals purchased $3.15m worth equity, believing levels to have turned attractive.

Analyst Ovais Ahsan at JS Global said that the index bounced back from intra-day lows to recover some initial losses as local institutions cherry picked blue chip scrips.

Uncertainty over the political situation remained a key concern as the protestors for short while invaded the state television’s premises.

Index heavy weights OGDC lost Rs2.25; UBL was down by Rs2.41 and MCB declined by Rs3.01.

“The relative resilience of the market is due to high levels of cash with local fund managers and foreign investors looking battle hardened enough to stay long despite the political imbroglio” argued Ovais Ahsan.

Analyst Ahsan Mehanti at Arif Habib Corp stated that rupee instability and political deadlock impacted sentiments amid support by state owned institutions.

Published in Dawn, September 2nd , 2014