KARACHI, May 28: Stocks on Tuesday reacted negatively to the president’s tough speech warning India of an appropriate retaliation if attacked as prices fell across a broad front on hasty selling, pushing the KSE 100-share index down by 2.5 per cent or 42.17 points at 1,673.29.

The last two sessions’ buying euphoria faded, reinforcing the investor perception that threat of war with India is still there and there is a need to be more cautious rather than ride bandwagon.

But unlike the previous panic sell-offs, no one tried to breach through the circuit breakers and stopped close to them, which shows that long-term market outlooks appears to be bullish.

“The recent peace initiative launched by the big powers led by Russia had raised hopes that the border tension between the two nuclear neighbours might be defused in due course and fear of war might be averted,” stock analysts said adding but the “president said the peace with India is still elusive.”

“The market was anticipating a conciliatory tone, signalling fresh steps against the militant groups to appease India but president’s speech was devoid of any further concessions despite his strong opposition to any form of terrorism,” says a leading stock

analyst.

Investors who had built up long positions during the last two sessions’ sustained run-up during which the index had recovered 187 points or 12 per cent amid hopes of peace again turned shaky and indulged in hasty selling, although there was no matching buying offer even at the decline.

Leading among them recalled Indian prime minister’s statement that “lightning could strike even when the sky is clear” and the president’s speech also pointed to the looming danger.

“The market is expected to dance to the tune of news from the border, the Indian reaction to the president’s speech and the recent test-fire of missiles by Pakistan,” brokers said.

The KSE 100-share index was down by 42.17 points or 2.5 per cent at 1,673.29 as compared to 1,715.46 a day earlier as all the leading shares fell just close to their circuit breakers of 2.5 per cent either-way price change.

Minus signs dominated the list, major losers being BOC Pakistan, Pakistan Oilfields, PSO, Lever Brothers and Wyeth Pakistan, which suffered decline ranging from Rs.2.60 to 12, the largest being in Wyeth Pakistan.

Other pivotals, notably Central Insurance, Lakson Tobacco, Siemens Pakistan, Clariant Pakistan, Packages and Shafiq Textiles fell by one rupee to Rs.1.75.

Gains were fractional barring J.D.W. Sugar, Transmission Engineering, Sigma Lease and Husein Industries, which rose by one rupee to Rs.1.30.

Volume fell to a low ebb of only 35m shares as investors did not try to breach through the circuit breakers after indulging in panic selling and preferred to withdraw to the sidelines. Losers forced a strong lead over the gainers at 202 to 37, with 28 shares holding on to the last levels.

The total turnover was far below the daily of a second-liner and one 5th of the volume leaders.

Unlike the last week’s sell-off and massive losses, the prices changes were mostly fractional as both bulls and bears maintained a status quo awaiting further developments on the political front in the backdrop of peace initiatives.

The most active list was topped by Hub-Power, easy 55 paisa at Rs.22.25 on 11m shares followed by PTCL, off 50 paisa at Rs.16.10 on 5m shares, FFC-Jordan Fertilizer, lower 50 paisa at Rs.6.35 on 4m shares, KESC, lower 35 paisa at Rs.4.70 on 3m shares, hereto inactive Japan Power, off 40 paisa at Rs.3.15 also on 3m shares and Sui Northern, off 50 paisa at Rs.12.70 on 1.206m shares.

FUTURE CONTRACTS: Panic selling on the forward counter spilled over to the ready counter but investors stopped short of circuit breakers, saving it from major losses.