KARACHI, Oct 28: After ten sessions of consecutive rise, the shares at the Karachi stock exchange went into technical correction on Monday, with the KSE-100 index down 29 points. The market opened firm with 8 points gain, but the bears managed to take charge only after half an hour’s trading.
“There were a couple of reasons for the market’s downturn”, said one floor trader. He listed the overdue correction in the index as the prime cause. The market had climbed as much as 125 points last week and in the face of an overbought position, technical correction of some 30-40 points looked to be due. Analysts referred to the high average badla rate of 25 per cent on Friday, which suggested more weak holdings and hence the possibility of downturn in highly leveraged stocks.
Lower than expected corporate announcements coming out from some key companies also precipitated the stocks fall. In particular, investors were piqued by omission of dividend by Fauji Fertilizer, which was expected to announce a payout, but none came along with the financial results for the year ended September 30, 2002. FFC unveiled after tax profit at Rs2.1 billion, slightly less than earlier year’s Rs2.3 billion.
While some analysts thought the PSO’s reported earning per share (EPS) at Rs7 per share was a little below expectations, broader market seemed to think otherwise, for the share gained 15 paisa on Monday to close at Rs189.55 on volume of 36.9 million shares. PSO posted after tax profit of Rs1.04 billion for the first-quarter ended Sept 30, 2002, representing growth of 176 per cent over the same period last year and sales revenue growth of 12 per cent to Rs48 billion.
Syed Adil, analyst at Moosani Securities observed that the market had started on a positive note, but institutions and punters adopted profit taking at higher levels. “Due to this selling, all major and sideboard items suffered fresh trimming”, he said. Since institutions and major players appeared to be bearish on the market, jobbers also joined the bears, analysts said.
Market capitalization decreased on Monday to Rs534 billion, from Rs541 billion on Friday. On the last trading day the previous week, market capitalization had increased by a record Rs59 billion, but analysts at brokerage InvestCap calculated that at least Rs35 billion of that was due to increase in paid-up capital from Rs31 to Rs88 billion of KESC on account of its debt-equity swap.
Trading volume declined to 233.7 million shares on Monday, from 390.1 million shares on Friday.
Major losers for the day were Shell (Pak), which lost Rs11 to close at Rs335, followed by Siemens Engineering which dropped by Rs10 to Rs265. Other easy scrips for the day included: Pakistan Oilfields; Gatron Industries; Adamjee Insurance; Shafiq Textile; Rupali; ICI; BOC (Pak); Wah Noble; Cherat Paper; Merit Packaging; Wah Noble, which lost between Re1 to Rs4.
Top gainers for the day were Pak Reinsurance Company, which rose by Rs108.15 to close at Rs1,550.60 and the pharmaceutical firm — Wyeth (Pakistan), which increased by Rs15 to Rs630. Other firm stocks included: Hinopak Motors; Atlas Honda; Lakson Tobacco; Javed Omer Vohra & Co; ICP SEMF; EFU Life; Faisal Spinning; Maqbool Textile; Clariant Pak and Al-Ghazi Tractors which gained between Re1 to Rs4.42.
Declining scrips numbered 178, which were ahead of the rising stocks at 101; some 43 stocks remained unchanged.
Hub Power topped the list of active issues, with a volume of 45.4 million shares, ending 20 paisa lower at Rs25.30. PSO saw turnover of 36.9 million shares; PTCL followed with a business in 34.5 million shares, down by 40 paisa to Rs20.60; NBP saw trading in 17.9 million shares, which climbed 20 paisa to Rs25.45.
Technically, market would test the psychological barrier of 2,250 this week, analysts said. Board meetings of some companies due in the week and early next month including that of PTCL on Wednesday were also stimulants. Fundamentally, also there was not much to worry except the settlement on the political side. Economy was thought to be in shape, following the Finance Minister’s assertion that the GDP was set to post growth of 4.5 per cent this fiscal, due to better crops; 5.7 per cent growth in large-scale manufacturing and rising remittances which were visualized to rise to Rs3 billion by the end of this fiscal.
FORWARD COUNTER: Activity on the future contracts cantered on PSO, which saw turnover of 17.5 million shares up 9 paisa to Rs190.90. Hubco saw activity of 7.3 million shares ending lower by 17 paisa to Rs25.50 and PTCL was down 37 paisa to Rs20.80 on a volume of 5.7 million shares.
DEFAULTING COMPANIES: Around eight companies came under trading on the defaulters’ counter on Monday. Redco Textile rose 25 paisa to Rs1.25 without any trading; followed by Mehran Jute up by 10 paisa to Rs0.60 on 100 shares. Among the losers, Amazai Textile was down 25 paisa to Rs1.25 on 2,000 shares; Dominion stock down 25 paisa and Custodian Modaraba; National Modaraba and Schon Modaraba, steady by 5 paisa each.