KARACHI, May 23: Trading on the Karachi Stock Exchange on Thursday could not be resumed as the authorities were not inclined to test the vulnerability of a market signalling distress signals and a possible crash in the backdrop of last three sessions’ massive price erosions caused by fears of war with India.

The market may also remain closed on Friday being the last trading session of the week as a series of steps taken by the KSE board to forestall panic selling did not work.

It is a timely decision to give a temporary relief to the investing public, although the market has a room for a further technical correction after having risen by 45 per cent during the last two months from 1,200 to 1,900 point index level, brokers said.

“Investors are now after the US dollar and the gold after having sold their stake in shares”, says a broker adding “massive amounts have already outflowed in both since the panic selling in shares started”. The dollar was quoted at Rs61.10 and Rs61.20 for buying and selling by the Forex Association of Pakistan, while the gold soared to 10-year peak level of Rs6,267 per 10 grams.

The market was closed for more than a month in 1971 war with India as it had crashed after the fall of Dacca, the provincial capital of former East Pakistan and was reopened after having taken some stabilization steps to keep it on the track.

“The Indian attack now appears to be a near-possibility”, says a leading stock analyst referring to Indian prime minister’s statement in Kashmir pointing to a “decisive fight leading to a new chapter of victory”.

Intense diplomatic efforts are at their peak to avert an imminent conflict between the two close nuclear neighbours but whether or not the sanity will finally prevail is unclear.

Already, the panicked invesors are unloading their long positions at throwaway prices as the war hysteria intensified and there could have been a total market crash if the KSE board has not acted promptly, analysts said.

The closure apparently followed after a massive rescue operation launched by the institutional traders and the financial institutions at the lower levels failed to produce the desired results as disturbing news from the borders followed in quick succession, sending signals that the war has begun and the consequent fresh panic liquidation.

An idea of nervous and panic selling may well be had from the fact that corrective steps taken by the KSE to forestall further decline lost their relevance as most of the leading shares, notably PSO, Shell Pakistan and Nestle MilkPak finished around their circuit breakers.

“The market has lost over 16 per cent, eroding about Rs54 billion from the market capitalization during the last three sessions after the war hysteria gripped it, greater part of which is contributed by the rumour-mongers and where the end will come is not clear”, stock analysts said.

“Investors are opting for gold and dollar after unloading long positions in stocks as both are considered safe havens in the war-like situations”, they said adding the “outflow is massive running into billion of rupees”.

All roads may still not lead to a possible Indo-Pak war, there is no immediate possibility of easing of the prevailing tension on the borders, they said adding the “series of successive negative developments including the killing of a moderate Kashmiri leader continue to add fuel to the fire”.

“I don’t think the market sentiment could be boosted at least for the near-term after injecting massive amounts to reverse trend”, says a leading broker “investors have already gone to an undeclared war and may take quite sometime to be back in the market”.