KARACHI, Sept 6: The KSE 100-share index on Monday plunged by 123.31 points or 2.32 per cent on panic-selling by the weak holders and some leading punters after the announcement of date for the introduction of margin financing through banks , replacing progressively the current badla system.

The market capital also showed a massive erosion of Rs34.151 billion at Rs1,402.908 billion as all the leading shares, notably massively-capitalized suffered one of the worst pruning in the recent past and fell like house of cards.

The replacement of the decades-old badla mode of investment, considered to be an envy of the moneyed people which ensures overnight windfall in crisis-like conditions, did worry a big section of investors but the market regulator thought that doing away with this system was an effort to restore sanity to stock trading.

Over the last couple of weeks badla investment were staying at a record high of Rs28 billion and needed a lot of selling to push it down to a sustainable level of Rs25 billion. And that process appears to have started with the Monday's plunge, analysts said.

"The date of Oct 8 is too close to square outstanding positions", commenting on the firm resolve of the Securities and Exchange Commission of Pakistan (SECP) to do away with badla system "and this perception created panic among the punters and the consequent heavy panic-selling".

"I don't think the panic was genuine", says a leading analyst "those who are in the share business fully know there is no alarming difference between the two sans sanity". After falling by 150 points at one stage, the KSE 100-share index finally closed at 5,195.42 points breaching through the two consecutive barriers in a session, something very rare pointing to the market's general direction.

It has been hovering within the range of 200 points - 5,400 and 5,300 - for the last couple of weeks and it was widely speculated that it could rise to 6,000-point level after Shaukat Aziz took over as prime minister. But it behaved quite the reverse.

The market could fall another 40 to 50 points on Tuesday on spill over selling but bears may not be in a position to have a field day if financial institutions come to the aid of ailing market and resume covering operations at the attractively lower levels.

Bank, energy, fertilizer and cement shares have now assumed attractively lower levels during the recent sell-off and ensure handsome capital gains within a short time.

Analysts said the market has been under pressure since the new prime minister assumed powers as the chief executive instead of welcoming his new assignment in the backdrop of his performance as the finance minister.

"Investors have been expecting some positive word from him on the Capital Vale Tax (CVT), which has halted the market's upward drive both in terms of price flare-up and daily volumes", brokers said "but without letting settle down and giving breathing space punters decided to unload long positions and creating scare among the prospective investors".

Most analysts predict the correction could well prove a passing phase as the market growth fundamentals are there and there is a possibility of grand turnaround any time.

Minus signs dominated the list under the lead of Colgate Pakistan, Lakson Tobacco, Arif Habib Securities and Javed Omer, which suffered sharp fall ranging from Rs10 to Rs25. Other leading losers included Cherat Cement, National Refinery, Indus Motors, Pakistan Refinery, International Industries and Atlas Honda, off Rs4 to Rs8.10.

Some of the leading gainers included WorldCall, Glaxo-SKF, Pakistan Engineering and Nestle MilkPak, which posted gains ranging from Rs1.50 to Rs15.25 but the largest rise of Rs50 was recorded in Wyeth Pakistan.

Trading volume rose to 190m shares from the previous 102.788m shares but losers forced a strong lead over the gainers at 270 to 33, with 30 shares holding onto the last levels.

The most active list was topped by F.F. Bin Qasim, easy five paisa at Rs20.25 on 24m shares followed by D.G.Khan Cement, off Rs2.75 at Rs54.90 on 21m shares, National Bank, lower Rs1.70 at Rs69 on 17m shares, OGDC, easy Rs1.20 at Rs63.20 on 15m shares, Bank of Punjab, down by Rs2.25 at Rs62.30 on 11m shares, PTCL, lower 85 paisa at Rs40.90 on 9m shares and Hub-Power, easy 55 paisa at Rs30.50 on 8m shares.

Other actives were led by Sui Northern Gas, off Rs1.25 on 10m shares, Askari Bank, sharply lower by Rs3.80 on 7m shares and Pak PTA, lower 80 paisa on 6m shares.

FORWARD COUNTER: Pakistan Petroleum came in for active selling and fell sharply lower at Rs105.95 on 26m shares followed by OGDC, easy by Rs1.15 at Rs63.90 on 8m shares, D.G.Khan Cement, off Rs2.75 at Rs55.10 on 6m shares, PTCL, lower Rs1.10 at Rs55.10 on 6m shares, PTCL, off Rs1.10 at Rs40.85 on 5m shares and F.F. Bin Qasim, lower Rs1.05 at Rs20.35 also on 5m shares. Others also fell from the recent highs.