KSE-100 index dives by over 500 points

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KARACHI: With the Supreme Court of Pakistan and Tehrik-e-Minhajul Quran chief Dr Tahirul Qadri creating shockwaves in Islamabad, bourses around the country took a major battering. The Karachi Stock Exchange’s benchmark 100-index crashed by more than 500 points and major players expect more volatility in the days to come.


“The market had been jittery because of the sit-in in Islamabad but the SC’s order made further breaches and those traders who wanted to book losses sold their shares,” said Arif Habib, former president KSE and head of Arif Habib Corp.


“The market will exhibit signs of nervousness till the political situation improves.


If national institutions follow the rule of law, the market will [resurface] because traders dislike extra-constitutional measures.”


Tuesday’s fall happens to be the second-largest in Pakistan’s history. The largest was the May 2008 fall, which saw the index shed over 500 points in a single session. As a result, operation of the bourses were suspended from August till December that year.

However, according to Habib, the current situation also presents serious buyers with the option of finding good bargains.


“The quarterly results of several companies are good and these will support the market despite political turmoil.”


On Tuesday, the KSE-100 index fell by 525.29 points, or 3.16 percent, to 16,107.89 points against Monday’s close of 16,633.18 points as panicky investors offloaded their holdings. The index continued on a downwards trajectory during both sessions, registering its lowest ebb at 16,049.06 points. Meanwhile, the KSE-30 index shed 385.59 points, or 2.84 percent, to close at 13,196.76 points.


The huge selling spree triggered surges in both turnover and value during the day. Turnover rose by 152 million shares to 239.42 million shares from 87.94 million shares whereas value rose to Rs5.28 billion against Rs1.68 billion recorded in the last session.


The value of several stocks declined by some five percent and hit locks at the lower levels; however, strong fundamentals of many stocks prevented an across-the-board lock from kicking in, said Hasnain Asghar Ali, COO Escorts Capital.


This the reason many analysts are optimistic about the future. According to Furqan Punjani, deputy head of research at BMA Capital, investors are likely to return to the bourses, drawn by the full-year results (and attractive dividends and bonus issues) for primarily commercial banks and fertilisers as well as the attractive half-yearly results for cements, textiles and IPPs.


Of the active issues, the highest increase was recorded in the shares of Gillette Pak, which increased by Rs5.92 to Rs124.41 per share, followed by Al-Noor Sugar, which rose by Rs1.84 to Rs38.74 per share.


The biggest loser was Nestle Pakistan Ltd, which saw its share price fall by Rs225.00 to Rs4,550 per share, followed by Rafhan Maize Prod, which saw its price eroded by Rs199.92 to Rs3,798.46 per share.


The leaders in terms of turnover were Fauji Cement, Byco Petroleum, TRG Pakistan Ltd, Jahangir Siddiqui Co and Maple Leaf Cement. However, the value of all these stocks declined.


Fauji Cement was the volume leader with 43 million shares; followed by Byco Petroleum with 20.12 million shares traded.


Shares turnover in the futures market increased from 3.89 million shares traded in the previous session to 14.21 million shares. Of a total of 365 companies’ stocks traded, 15 advanced, 336 declined and 14 remained unchanged.


Our Islamabad correspondent adds: The Islamabad Stock Exchange reacted badly to what investors called “political chaos” and saw the ISE-10 index fall by a hefty 86 points. Market analysts expect the situation to remain volatile in the near future.


The ISE-10 index downtrend began on Monday as Tehreek-e-Minhajul Quran workers started converging on the dharna site, which is a few meters from the ISE. The exchange shed a total of 11.06 points on Monday.


However, on Tuesday, the index went into freefall after the SC order and lost another 86.93 points to close at 3140.28 points.


“The power shortage, the bad law and order situation and the huge circular debt had kept the stock market under pressure but the current decision of the apex court and the long march pressuring the government to go home have driven the market into the red zone,” said ISE Managing Director Mian Ayyaz Afzal.


Meanwhile, a top official of the SECP said: “Political uncertainty is the cause of the market crash and the market will remain volatile in coming days too.”


Our Lahore correspondent adds: While the bazaars and the manufacturing sector hummed away unconcerned, the bourse felt the shivers of political uncertainty and the LSE-25 index shed a total of 159.71 points to close at 3,770.10 points.


“Political uncertainty is poison for the capital markets and its reaction over the last two days reflects the pressure felt by investors,” said former chairman Lahore Stock Exchange Group Captain (retd.) Naeem A. Khan.


“The market was already overheated and the recent turmoil on the political front provided the big players with an excuse to liquidate their assets.


If the situation does not improve, we soon might see an even greater decline in the capital market index.”


Gillette Pak Rs5.92

Closing Rs124.41

Al-Noor Sugar Rs1.84

Closing Rs38.74

Quetta Tex Rs1.13

Closing Rs32.00

Nestle Pak Rs225.00

Closing Rs4,550.00

Rafhan Maize Rs199.92

Closing Rs3,798.46

Attock Petroleum Rs17.28

Closing Rs483.20

Courtesy:  The News

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