KARACHI, May 23: Stocks on Monday virtually crashed on nervous selling triggered by rumours that the Securities and Exchange Commission of Pakistan (SECP) has rejected the KSE proposal to allow free float of five per cent instead of existing one per cent on the forward counter. The KSE index shed 317 points or 4.34 per cent at 6,983.30, although rumour was discounted by the relevant quarters.
The massive snap market retreat raised fears among the investors that bears may be out to repeat the sad episode of last March when they pushed the index by 30 per cent from the peak level of 10,300 to below 8,000 points.
But analysts said the current situation is quite different from that of March as the federal budget is just two weeks away and strong buying could re-emerge though in patches to halt the further downward drift. However, the plunge reflects in more than one way that the market is treading on a terribly weak wicket and will continue that way if the SECP does not act swiftly on some of the market-friendly proposals, they said.
The KSE 100-share index plunged below the barrier of 7,000 points and finished around the day’s lowest level at 6,983.30 as compared to 7,300.09 at the last weekend, off 316.79 points or 4.34 per cent chipping away Rs82 from the market capital at Rs1,954 billion.
Leading base shares, which in the recent past have assumed the role of trend-setters and investors hate to operate beyond them, notably PTCL, PSO, OGDC, Pakistan Oilfields and National Bank received massive battering but without finding matching support at the dips.
“The damage to the existing price structure was so massive that it may not be undone by strong speculative buying on some good news or pre-budget positive leaks”, brokers said.
But some others said it was pre-budget price manoeuvring, which could lead to a big “post-budget kill” on selected counters. There was a panic all around as everyone was trying to get out of the market but there was no buyer amid prevailing confusion as was reflected by a modest volume of 102m shares.
“The market is in the tight grip of speculative forces who are claimed to be expert in rumour-mongering”, says a leading analyst “despite official denials of certain previous rumours they tilt the price balance in their favour whenever they want after circulating rumours”.
Official KSE sources said there was no question of rejection of its proposal for increase in free float because the SECP has not considered it as yet, he said. “The move appears to be beyond the scope of stock trading alone”, some others said “it may have political undertone of serious proportions to overshadow the economic gains in the backdrop of sharp increase in the GDP to 8.35 per cent”.
Losers dominated the list under the lead of energy shares, largest decline of Rs13.30, Rs14, Rs18.65 and Rs19 being in Pakistan Oilfields, Shell Pakistan, National Refinery and PSO followed by PPL, OGDC, Mari Gas, Attock Petroleum, Pakistan Refinery, Arif Habib Securities and Javed Omer, which suffered fall ranging from Rs5.05 to Rs13.95.
Ghani Glass, Suraj Cotton, Shezan International, Goodluck Industries and Gatron Industries were leading among gainers, up by Rs1.25 to Rs6.40. Trading volume fell to a lowest level of 102m shares in the recent past as buyers kept to the sideline and did not oblige sellers in a falling market as the situation was unclear till the close.
Out of 311 actively traded, only 27 shares managed to finish modestly higher, while 263 fell, with 21 shares holding on to the last levels.
PTCL led the list of major losers, off Rs3.60 at Rs69 on 33m shares followed by OGDC, lower Rs5.05 at Rs96.70 on 12m shares, Sui Northern Gas, easy Rs3.10 at Rs59.50 on 7m shares, National Bank, off Rs4.70 at Rs90.25 on 5m shares, PSO, sharply lower by Rs19 at Rs361.25 on 3m shares, Pakistan Oilfields, lower Rs3.50 at Rs252.60 also on 3m shares.
Other actives were led by Pak PTA, lower 85 paisa on 5m shares, Hub-Power, easy Rs1.20 on 3m shares, Fauji Fertilizer Bin Qasim, lower 35 paisa also on 3m shares and TRG Pakistan, easy 30 paisa on 2m shares.
FORWARD COUNTER: PTCL also came in for active selling in the cleared list and was marked down by Rs3.60 at Rs69.07 on 33m shares followed by Sui Northern Gas, off Rs2.50 at Rs60 on 3m shares, OGDC, lower Rs5.10 at Rs96.88 on 2m shares, and PSO, off Rs19.03 at Rs361.62 also on 2m shares.
DEFAULTER COS: The list of actives included Unity Modaraba, lower five paisa at Rs0.60 on 0.191m shares, while all others were modestly traded amid fractional price changes.
DIVIDEND: Bank Alfalah, interim cash at the rate of 12 per cent, Noon Sugar, right shares at the rate of 100 per cent at a premium of Rs30, face value Rs10 or Rs40 per share.