KARACHI, Feb 18: Stocks resumed trading on Monday on a subdued note as investors indulged in renewed selling at the higher levels in the absence of leading bulls and financial institutions. The KSE 100-share index shed another 48 points, eroding Rs4 billion from the market capitalization.
Most of the blue chips, which have soared to new peak levels boosted by strong buying on the perception of a “substantial aid package” from the US came in for active selling at the inflated levels, pushing the market into a deeper recession.
The fall in the textile sector was attributed to negative comments of the commerce minister on the US concessions on the textile exports, but heavy selling in the bank shares, notably MCB, which has come out with a good final dividend of 12.5 per cent last week followed by reports of higher profits by all the leading banks was not easily explained.
The selling appears to a sympathetic investor move in line with the below market expectations debut made by the National Bank share, one broker says.
The KSE 100-share index closed with a fresh sharp decline of 47.94 points or 3 per cent at 1,655.37 as compared to last weekend’s 1,703.31, breaching through the jealously guarded psychological barrier of 1,700 points followed by fresh heavy selling in PTCL and Hub-Power.
“The market is in search of a sustainable support level, but fails to find one,” stock analysts at the W.E. Financial believe. “Its inability to digest the excess share float appears to be the chief villain of the game.”
The KSE index had soared to two-year peak level of 1,800 points prior to the President’s US visit amid hopes of an attractive economic package, but failed to go beyond this level or sustain this because of lack of follow-up support.
The successive downward breach of the barriers, the index may find support around 1,600 level, though investors are still ensure about its direction and awaiting fresh moves from the “big ones” but after the eid holidays.
“After having digested all the positive news one by one, the market is out to find some new ones, but there are not many, which led to selling,” a leading stock analyst at the AHRL said.
The general perception is that the market has overreacted to the expected US aid package, which was billed as healer of economic ills prior to the president’s visit, but the end result was not that encouraging and hence the reversal.
“Abnormal weak-holing in an overbought market needs correction and that came in the form of selling amid a higher carryover charges,” analysts at the Moosani Securities say.
The notable feature was that the share of National Bank currently being traded on the provisionally listed companies counter came on the ready board, making a bearish debut. All other blue chips, still ruling at the highly inflated levels also attracted selling and finished with sharp fall.
Minus signs again dominated the list, major losers — EFU Life, Adamjee Insurance, Burewala Textiles, General Tyre, Cherat Paper, Engro Chemical and PSO — suffered fall ranging from Rs2 to 4.25, the largest being in PSO.
Some of the leading shares, notably Faisal Spinning, Thal Jute, Attock Refinery, Shell Pakistan, Atlas Honda, Pakistan Oilfields and Mehmood Textiles, put on gains ranging from Rs1.55 to Rs2.75, but the largest rise of Rs10 and Rs20 was recorded in Wyeth Pakistan and Lever Brothers.
Trading volume further fell to 151.28 million shares as losers maintained a strong lead over the gainers at 160 to 38, out of 235 actives.
The most active list was topped by Hub-Power, lower 85 paisa at Rs27.35 on 55m shares followed by PTCL, easy by 90 paisa at Rs17.30 on 35m shares, Sui Northern, lower 90 paisa at Rs13.00 on 11m shares, Engro Chemical, sharply lower by Rs2.15 on 7m shares and National Bank, off Rs1.45 at Rs16.75 on 6m shares.
Other actives were led by PSO, sharply lower by Rs4.25 on 6.085m shares, Fauji Fertiliser, lower by 40 paisa on 5.179m shares, KESC, down by 65 paisa at Rs6.25 despite reports that its liability of Rs62 billion will be turned into its equity before privatization, ICI Pakistan, off Rs1.25 on 2.676m shares and D.G. Khan Cement, lower Rs1.75 on 2.205m shares.
FUTURE CONTRACTS: All the leading speculative shares came in for strong selling by way of rolling of positions from the matured February settlements to the March ones, trading in which resumed on Monday side by side the ruling contracts.
The largest decline ranging from Rs1.75 to Rs4.10 was noted in Engro Chemical, ICI Pakistan and PSO at Rs72.75, 46.25 and 120.15, respectively.
Hub-Power led the list of actives, off one rupee at Rs27.35 on 3.574m shares followed by PTCL, lower 85 paisa at Rs17.40 on 2.194 shares.
DEFAULTER COMPANIES: Colony Textiles came in for active support followed by reports of a cash dividend of 10 per cent and its removal from this counter to the ready section as its management met the KSE demands. Shahpur Textiles and Pangrio Sugar followed it, lower 25 paisa and up 10 paisa at Rs1.50 and Rs1.10, respectively, on 1,000 shares each.
DIVIDEND: Saritow Textiles cash five per cent, Colony Textiles, cash 10 per cent, PICIC Commercial Bank, bonus shares at 25 per cent and right shares at 40 per cent, Shakargang Sugar, 7.5 per cent, Ibrahim Fibre, 15 per cent on all merged shares and Baba Farid Sugar, nil.