KARACHI, Jan 26: Stocks on Monday fell across a broad front on active badla-related selling in most of the pivotals in the absence of matching covering purchases by any of the leading market trend-setters. The KSE index passed through a big shakeout of 85.21 points, wiping out Rs25bn from the market capital.
"It was a field day for the massively battered bears who have been denied the right of technical correction by the bulls in an overbought market and how they will behave during the sessions preceding the Eid holidays could have a negative bearing on the future share outlook," analysts said.
Below market expectations interim dividend by Shell Pakistan at 65 per cent or Rs6.50 per share (previous Rs9.50) also weighed against the underlying sentiment as was reflected by a sharp decline of Rs21 in its share value at Rs409 on 60,200 shares.
As is customary with the previous market traditions before the long weekend ahead there could be further price erosions on the overvalued counters as no one would like to take risks as any thing could happen during the Eid holidays.
Essentially, it was a technical correction as investors sold in a bit haste their long positions owing largely to extended badla trading because of Eid holidays.
The KSE 100-share index shed 85 points or about 2 per cent at 4,677.16 as compared to 4,762.37 at the last weekend session as all the leading base shares attracted heavy selling at the inflated levels. Market capital also suffered a sharp setback of Rs24.791bn at Rs1,220.279bn.
"The extended badla of seven days because of Eid and Kashmir day holidays next week was the chief destabilizing factor behind the snap shakeout," says an analyst. "The reversal is technical and was long overdue owing to the market's highly overbought position and has nothing to do with the positive basic fundamentals."
After breaching the crucial barrier of 4,700 and close to its next target of 4,800, the KSE index has virtually raced to these levels without going into the consolidation process, some others said adding "the inevitable has to happen at one day and the extended badla was made an excuse by the bears."
The interesting feature was that there was a buyer at each dips and as a result all the selling offers were absorbed both the decline and the rise, the most active of them being energy, cement, auto and fertilizer shares.
Bank shares also performed credibly on active short-covering at the falling prices followed by reports that the leading banks will finance the construction of small dams in addition to house financing schemes. Car financing by them is already on the higher side of the initial thinking.
Meanwhile, Tetley brand has entered Pakistan's competitive packaged tea market and analysts are evaluating its likely impact on the market share of Unilever Pakistan during the coming months.
Tetley is launched by the Lakson group of industry, which has a big stake in a number of industries in addition to tobacco and has a sound financial base.Bulk of the selling remained confined to energy shares, PSO and Shell Pakistan which fell by Rs7.10 to Rs21 followed by Siemens Pakistan, Nestle MilkPak and Parke-Davis, off Rs20 to Rs33.
Other prominent losers were led by Gatron Industries, National Refinery, Pakistan Refinery, Atlas Honda, Atlas Battery, Pakistan Oilfields and IGI Insurance, which suffered fall ranging from Rs4 to Rs10.
Prominent gainers were led by Clariant Pakistan, Sitara Chemicals, Singer Pakistan, Ahmed Hassan Textiles, Babri Cotton and EFU Life Insurance, up by Rs1.90 to Rs4.
Trading volume shrank to 299m shares from the previous 473m shares as losers forced a strong lead over the gainers at 273 to 91, with 37 shares holding on to the last levels.
DG Khan Cement again topped the list of most actives, off 90 paisa at Rs47.90 on 38m shares followed by Dewan Salman, easy 15 paisa at Rs23.15 on 21m shares, Dewan Motors, lower also by 15 paisa at Rs37.10 on 20m shares, PTCL, off 25 paisa at Rs37.45 also on 20m shares and OGDC, lower by Rs1.65 at Rs50.95 on 18m shares.
Other actives were led by Chakwal Cement, up 50 paisa on 14m shares, PIAC, off 85 paisa on 13m shares, FF Bin Qasim, easy 60 paisa also on 13m shares, Nishat Mills, up by 25 paisa on 11m shares and Sui Northern Gas, off Rs2.65 on 11m shares.
FORWARD COUNTER: PSO also attracted active selling and fell by Rs7 at Rs282.50 on 5m shares, Pakistan Capital Market Fund, lower by 50 paisa at Rs11.25 on 6m shares, and FF Bin Qasim, easy 52 paisa at Rs19.85 on 3m shares. Hub-Power and PTCL, the two volume leaders, fell 50 paisa and 36 paisa at Rs38.85 and Rs37.90 respectively on 3m shares each.
DEFAULTER COMPANIES: Kashmir Edibles came in for active selling at the higher level and fell by 85 paisa at Rs13.75 on 0.724m shares, followed by Industrial Capital Modaraba, easy by 10 paisa at Rs2.20 on 0.343m shares and Trust Brokerage, up Rs1.50 at Rs5.45 on 0.125m shares. Others were modestly traded mostly on the lower side.
DIVIDEND: Shell Pakistan, interim cash at 65 per cent or Rs6.50 per share.