KSE falls 650 points amidst political uncertainty

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A fast deteriorating law and order situation coupled with fall in global shares and political uncertainty following the government’s decision to charge former President Musharraf with high treason made the Karachi Stock Exchange benchmark 100-share index tumble sharply by 650 points on Monday, dealers said.


Arif Habib, chairman of Arif Habib Corp, said people did not respond positively to the cut in the discount rate in the monetary policy. They think the energy prices would go up in the coming days and the government needs to push up the policy rate. “Besides, contrary to the expectation, the government has not withdrawn the taxes it has imposed,” he said.


Habib said, besides levy on moveable net asset and increase in sales tax rate was not taken back. “Previously, the sales tax was levied on ex-factory price now it has been extended to retail price – which is going to have an overall impact of 3.5 percent,” he said. Fall in global stock prices also dampened the sentiments at the local market.


The 100-index fell by 650.27 points, or three percent, to 21,048.08 points against 21,698.35 points recorded in the last session. Although the index started on the positive note, it later started to decrease. The highest level was 21,833.48 points, while the lowest level of the day was recorded at 20,999.32 points. The KSE-30 index also fell sharply by 506.05 points, or 3.01 percent, to 16,332.14 points in the session against 16,838.19 points recorded in the last session.


Second- and third-tier stocks appeared as the volume leaders and the downward trend was registered across the board.


Index heavyweight Oil and Gas Development Company, MCB Bank Limited and Pakistan State Oil went down considerably. Fauji Cement, Pakistan International Airlines, Lafarge Pak, Bank of Punjab and Pace (Pak) Ltd remained in limelight of third- and second-tier stocks. Of a total of 380 companies’ active in the session, 46 ended in green, 219 in red while 15 saw no change.


Contrary to the index, turnover and trading value increased, though the market capital decreased. Turnover improved by 47 million shares to 323.16 million shares from 276.68 million shares, trading value expanded to Rs10.54 billion against Rs9.64 billion, while market capital was slashed to Rs5.12 trillion against Rs5.27 trillion earlier.


Zafar Moti, an analyst and senior member KSE, said the market opened at the positive reaction on discount rate cut by 50 basis points but later it closed negatively on fall in global stocks – China and US markets were down but the 300 points correction was expected. “However, the government’s decision to book the former president Pervez Musharraf in treason case affected the investor sentiments,” he said, adding the investors are concerned about the fate of economy due to this simmering tension.


Samar Iqbal, senior manager equity sales, Topline Securities (Pvt) Ltd said the news of foreign selling shredded three percent from the local market. “Pressure in regional markets subdued sentiments of foreign investors, while local investors also stayed on the sideline due to the news regarding Musharraf,” she said.


Yaqoob Habib Khandwala, a senior small investor, said the market received the monetary softening delightedly with more than 100 points rise in the morning. However, later it fell on law and order situation with the killing of foreign tourists stoking fear of blockage to foreign investments. “A little impact of falling international markets also hit the sentiments at local bourse,” he said.


Fahad Ali, an analyst at JS Global, said the sell-off was triggered after news that Gen (R) Pervez Musharraf would be tried in the court of law. “Alongside, clarification on wealth tax issue remains a concern for the investors. Foreign investors were rumored to be net sellers in the market, creating further pressure,” he said.


They expected the market to remain volatile during the week where a further dip of 2.5 percent should be treated as an opportunity to buy, he suggested.


Highest increase was recorded in shares of Sanofi-Aventis, which rose by Rs27.01 to Rs567.39 per share followed by Crescent Cotton that improved by Rs2.41 to Rs50.75 per share. Major decline was noted in shares of Nestle Pak, which fell by Rs329 to Rs6,251 per share followed by Colgate Palmolive that slid by Rs65 to Rs1,735 per share.


Significant turnover was recorded in stocks of Fauji Cement, Maple Leaf Cement, Pakistan International Airlines, Lafarge Pak, Jahangir Siddiqui Co, TRG Pakistan Ltd, Pakistan Telecommunication Company Limited, Bank of Punjab, Pace (Pak) Ltd and Wateen Telecom Ltd. Fauji Cement remained the volume leader with 41.26 million shares with decline of 28 paisas to Rs13.25 per share. It was followed by Maple Leaf Cement with 24.61 million shares with decrease of Rs1.06 to Rs22.52 per share.


PIA remained the third leading stock with 21.56 million shares with increase of 81 paisas to Rs9.97 per share and PIA remained the only top ten stocks, which saw rise in share price. TRG Pakistan Ltd recorded trading of 13.19 million shares with decline of 81 paisas to Rs9.47 per share; PTCL noted trade of its 12.80 million shares with decline of 99 paisas to Rs20.05 per share; Bank of Punjab’s 10.78 million shares were traded with decline of Re1 to Rs13.02 per share; Pace (Pak) Ltd’s 8.22 million shares traded with decline of 55 paisas to Rs4.06 per share; Lafarge Pak 14.09 million shares with decline of 28 paisas to Rs8.65 per share; Jahangir Siddiqui Co 13.21 million shares with decline of Re1 to Rs11.86 per share; and 7.46 million shares of Wateen Telecom Ltd were traded with decline of four paisas to Rs4.44 per share.


Shares turnover in the futures market improved to 39.79 million shares from 19.96 million shares traded in the previous session. FCCL June futures led the market with 8.03 million shares with decrease of 27 paisas to Rs13.33 per share, followed by FCCL June futures with 5.30 million shares with decline of 10 paisas to Rs13.50 per share. Out of 156 companies’ shares traded in the future market, nine advanced, while share price of 147 companies declined.

Courtesy:   The News

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