KARACHI, May 20: Stocks on Monday crashed under the weight of mounting panic unloadings as fears of an imminent Indian attack gripped the market followed by free-for-all, which pushed the KSE 100-share index down by a massive 7.5 per cent or an erosion of Rs29 billion from the market capital.
The index at one stage was down by 150 points and it appeared that the market’s collapse was imminent as all the rescuing forces groaned under the avalanche of nervous selling coming from all the quarters and there was a loud whispering about the market closure to save the small investors.
However, it was not a largest single-session index fall as it had declined by 170 points on May 30, 2000 after the default of a leading KSE member and 8.46 per cent or 129 points on July 10, 1998 when India tested its nuclear bomb. But the successive breach of the circuit breakers on the blue chip counters both on the ready and forward counters did worry leading analysts.
The KSE 100-share index finally finished at 1,647.19 down 132.57 points as compared to 1,779.76 at the last weekend as only nine shares rose fractionally, while 257 fell in a total volume of 71m shares, reflecting the absence of bulls. At one stage it touched the lowest level of well over 150 points.
The scare of war was allaround amid rumours of an imminent Indian attack, although excepting border skirmishes, the signs of full-scale war were not visible so far.
“There was a loud whispering about the temporary closure of the market if the panic selling continued for another couple of sessions”, brokers said “But KSE high-ups are tight-lipped on the issue without any comment on the prevailing war-like hysteria”.
But some others think institutional support could intervene at this stage to save the market from further losses and the next couple of sessions could be very crucial for its future direction.
“I don’t think the war is around at the moment”, a leading stock analyst Alireza at the Moosani Securities feel “the border situation will remain tense as Indian pressure will continue to attain certain near-term political objectives”.
He says nobody could control the prevailing scare in the market but one should take cue from the “terribly calm official posture to the developing scenario”.
“During the last three months, the market has risen by about 45 per cent or 800 points and if it erodes another few hundred points, its basic strength will remain intact, the prevailing war hysteria notwithstanding”, he adds.
Faisal Abbas of AHRA, another stock analyst says the situation is certainly tense but the talk of a possible Indian attack appears a bit too early.
“Essentially sensitive to war-like news, the market gives in to panic selling after everyone tries to get out of it to avert further losses”, he says.
The selling pressure on the overvalued shares was so strong that circuit breakers were broken more than once, although there was no matching buying support from any quarter including the institutional traders.
Energy, chemicals and most of the blue chips on the other counters notably the MNCs received massive battering, falling well below the circuit breakers.
Big losers were led by Pakistan Oilfields, PSO, Shell Pakistan, Wyeth Pakistan and Lever Brothers, which suffered fall ranging from Rs9.60 to Rs16, the largest decline of Rs41.50 being in Wyeth Pakistan.
PSO, Shell Pakistan, Pakistan Oilfields, Attock Refinery, National Refinery, Al-Ghazi Tractors, Millat Tractors, BOC Pakistan, Glaxo-Wellcome also fell by Rs4.50 to Rs11.10.
Some of the secondliners, including Clover Pakistan, Wah Noble Chemicals, Goodluck Industries and PEL Appliances managed to finish modestly higher.
Trading volume fell to 71m shares as bulls kept to the sidelines as compared to 139m shares at the last weekend.
Hub-Power led the list of actives, off Rs1.75 at Rs21.80 on 20m shares followed by PTCL, sharply lower by Rs1.50 at Rs15.85 on 13m shares, KESC, lower 50 paisa at Rs3.90 on 8m shares, Sui Northern, off Rs1.50 at Rs12.10 on 6m shares and FFC-Jordan Fertilizer, lower Rs1.25 at Rs5.40 on 5m shares.
PSO led the other actives, off Rs11.10 on 4m shares followed by Pak PTA, lower 95 paisa on 3m shares, and Fauji Fertilizer, off Rs3.30 on 1m shares.
FUTURE CONTRACTS: ICI Pakistan, Engro Chemical and PSO passed through successive downward clearing after having broken the successive circuit breakers, falling by Rs3, Rs4.55 and Rs11.10 respectively at Rs37, Rs56.30 and Rs137.45. Others also sustained losses of varied degrees.
Hub-Power, fell by Rs1.75 at Rs21.85 on 9m shares followed by PTCL, off Rs1.50 at Rs15.90 on 3m shares.
DEFAULTER COMPANIES: Easier conditions also prevailed on this counter as prices of actives fell under the lead of Suzuki Motorcycles, off 95 paisa at Rs4.25 on 20,500 shares. Ravi Rayon was traded unchanged at Rs5 on 73,800 shares.