Investors also waited for some positive developments about the setting up of the proposed Rs20 billion market support fund agreed by bankers and financial institutions, and other corrective measures to put the market back on the rails, but trading failed to pick up.
However, at a meeting of the KSE, SECP and bankers held on Friday presided over by prime minister’s adviser on finance Shaukat Tareen, it was decided that the Rs20 billion fund would be operative during the next couple of days prior to the removal of the floor under the 100-share index. But it is feared that the amount proposed to be injected in the business is too small to absorb the floating stock awaiting exit even at a decline.
Some positive news about the IMF’s bailout package sans its demand of an increase of 3.5 per cent in the discount rate did evoke interest in some of the high-profile shares, notably Shell Pakistan, OGDC, National Bank, MCB and some others, but the general investors did not follow the lead owing to the absence of institutional support.
The market awaits an initiative from the big ones who jointly are capable of putting the market back on the rails in the absence of foreign investors, as most of them are on their way out amid fears of Pakistan’s weakening economy and financial problems, including falling foreign exchange reserves and a terribly weak rupee.
Owing to institutional support at the attractively lower levels, a parallel off-the-floor market is fairly active where millions of share are transacted daily at a discount of 15 to 20 per cent, while the official ready market is neglected for the last about three months.
Trading on the stock market on Monday, therefore, resumed on an insipid note as investors were not inclined to make fresh commitments as the floor under KSE 100-share index was extended for an indefinite period to forestall possible panic selling by the tired foreigners.
The KSE 100-share index was held unchanged at the weekend level of 9,182.88, without showing any movement and so did its junior partner 30-share index at 10,003.99, reflecting the absence of leading investors, while jobbers played on both sides of the market mostly in the undervalued shares.
A series of the meetings held throughout the week among the regulators to line funds before removing the floor on the earlier set deadline of Oct 27, remained inconclusive and the majority opted for its extension to save the market from an imminent crash.
“Hamlet and his proverbial ‘to be or not to be’ seems to have influenced the majority decision”, said analyst Ahsan Mehanti jokingly” and added “no one can halt the market’s rise or fall if it likes to behave that way.”
An overview of the economy and the financial sector both local and foreign reflects that hard times may still be ahead both on the corporate and financial fronts. How long the inevitable could be averted is anybody’s guess, he said.
“The market seems to have slipped into the hands of some vested interests who have made the entire investors a hostage leaving no room for them to exit or to make fresh commitments”, another analyst Tabish H. Rajabali thinks.
Heavily leveraged brokers appear to be among the leading decision makers about the floor and its extension or removal but one thing is clear that the situation will remain the same whenever the officials decided to remove the floor, he added.
Forward counter: Barring the NIB Bank, which came in for modest support in mid-week trading, all other shares remained neglected and ended at the previous levels, without any deal.—Muhammad Aslam.