0
Share market last week remained under pressure as leading shares received a massive battering as the negative news followed in quick succession, keeping investors on their toes all the time, leading to panic selling on more than twice.
The global fall in the world stocks followed by reports of slowed down in the US economy further accentuated the situation as some of the leading foreign investors also liquidated in part their stake in banking, oil and cement shares in line with their policy guidelines.
The issue of presidential re-election by the existing assemblies apart, the market took a major plunge of about five per cent and a single session fall of 385.01 points in the KSE 100-share index on Thursday followed by media speculation about the imposition of emergency. The net fall in the index was 750.20 points at 13,012.96, which eroded Rs226 billion at Rs3,814 billions.
The official denial about the media reports regarding imposition of emergency came a bit late when the panic selling had already wiped out Rs115 billion from the savings of small investors and signalled the exit of foreign investors, said a leading stock analyst.
However, the denial could put the market back on the rails again, possibly by the next week but it will take quite sometime to recover the massive fall in the market capital, although opinion is divided over the future direction of the market in the backdrop of developing situation on the law and order and political fronts.
The safest assumption appears to be that the market will maintain its erratic stance in the coming weeks as both — local and foreign --will not like to go beyond their predetermined positions and will refrain from building up new portfolios.
However, what worried analysts was the perception of foreign investors about the future share business outlook and whether or not they shared the concerns of the locals about the rigid positions taken by the contenders of power. “What will happen to the stock market if they decided to exit after taking away about one billion dollar tied to their portfolios in the share business”, asked a worried broker.
The KSE 100-share index plunged by five per cent on panic selling by all and sundry on fears of political turmoil as the president has reportedly decided to seek his re-election by the present assemblies, possibly on Sept 15.
Click to view the larger image
What seems to have worried bot,- local and foreign investors, was the opposition’s stand challenge it before the apex court and in streets as well, ,which analysts fear, would lead to law and order situation and political instability.
Bank, oil and other overvalued shares received massive battering after a section of foreign investors indulged in panic selling, notably MCB, National Bank, OGDC, Hub-Power and Lucky Cement.
A leading analyst, Faisal A. Abbas said the market is largely weighed down by some of the highly sensitive external factors as was reflected by falling volume figures and sanity may return to the market only after some of the immediate irritants are removed.
The other negative factor which tended the market decline was the fresh threats from the US to hit targets in Pakistan to wipe out AlQaeda’s safe havens in the tribal areas, some others said.
“Despite higher corporate earnings and payouts, from now onward political factors may guide the future market direction as investors think twice to invest in any mode of investment in the face of political polarisation and grim fight between the contender of power”, another analyst, Ahsan Mehanti said.
Massive battering received by the market trend setters, National Bank and MCB, notably on the forward counter reflects that the long-term investment scenario is not that encouraging, he added.
FORWARD COUNTER: Speculative issues on the forward counter also followed the lead of their counterparts in the ready section and fell in unison on active selling throughout the last week.
MCB, National Bank, Lucky Cement, D.G.Khan Cement, Bank of Punjab and other high-profile shares fell like house of cards on stray selling which assumed alarming proportions in line with the background news from the political front.—Muhammad Aslam
