KARACHI, July 6: The market price of one share of the par value of Rs10 in Nestle Pakistan stands at an incredible Rs4,844! It makes the stock, the most expensive among the 639 listed on the Karachi Stock Exchange.

The strength of the Nestle share can be gauged from the fact that each of the share in the company costs more than the combined value of all of the shares listed on the oil & gas, banks, automobiles, cement and insurance sectors.

The number of paid-up shares in Nestle is 45.4 million, which values the company at Rs220 billion.

Sponsors, who hold the majority equity, would obviously be counted among the multi-billionaires, but even an ordinary shareholder who may own just 200 Nestle shares would be a millionaire. Such is the power of Nestle.

And the market manipulators have found it an opportunity to steer the entire market to the direction of their choice, by trading in fewer than 400 shares a day.

Mohammad Sohail, CEO at Topline Securities says: "It is not difficult to move Nestle’s share price by 5 per cent, and the index, by just buying one share as the stock is thinly traded.

So if someone buys (preferably when the market opens in the morning and there are hardly any sellers) one share at the market price of around Rs5,000, the so-called benchmark KSE-100 Index would shoot up by 51 points and push the market capitalisation up by Rs12bn". This market expert says that such manipulation could give a wrong signal to a common investor who may be making investment decisions in the market, based on the index movement.

For the just completed financial year to end June, the KSE-100 gained 28.5 per cent. The annual financial statements of the food giant showed only 760 shareholders.

The trading volume in the stock last year was just 1,100 shares a day and its price jumped by 228 per cent, contributing 26 per cent to the year's gain.

"Not including Nestle, the index gained 21 per cent in FY11", the analysts calculated. As a consequence of this, Nestle weight in KSE-100 index basket has jumped to 8.2 per cent from 3.2 per cent a year ago.

After OGDC, Nestle is now the second largest share in KSE 100 basket, but unlike OGDC, the share is illiquid and does not rank among the top 50 trading stocks at the market.

Due to its tight holding, stock brokerage firms find it futile to cover the company in their reviews.

The price in Nestle had ballooned by 67 per cent in the 18 trading sessions preceding the close of the year to June. The share has now started to shed value. In the previous three sessions (Monday-Wednesday), Nestle stock lost Rs671.

"In the trading session on Wednesday, the KSE-100 index declined by 43 points", an analyst pointed out, claiming that excluding the fall of Rs254 in the price of Nestle stock to Rs4,844 during the day, with trading noted in only 380 shares, the market would have finished in positive territory.

Investors have started to be startled by the market mover and shaker and many are wondering if the stock is being manipulated to paint a distorted picture of all of the market.