Index suffers sudden fall after KSE notification

Posted on 11.18.06 by StockPK Team @ 8:11 pm    

Closing bell restored indices in red at the Karachi stock market following a KSE notification requesting its members to furnish information regarding in-house badla and ensure placing of shares in CDC blocked account with immediate effect on Friday.

The said notification attracted fresh waves of negative sentiments to the stock exchange that resulted in plummeting KSE 100-share index by 144.17 points to 10,705.87. While junior 30-index plunged 109.07 points to 13,219.99.

Brokers passed on their head itch to the investors, who came in panic in closing hours of the twin trading weekend sessions and sold off their intra-day purchasing and early holdings at buyers’ offer.

Moreover, panic selling in OGDC that was triggered owing to low earning per share prediction made by BMA Capital in its research report at Rs10.01 for the next fiscal year as compared with Rs10.69 EPS for just ended year. BMA Capital is an adviser to OGDCL and building its book for GDRs offering in the international markets.

The index giant OGDCL decreased by 4.6 per cent or Rs6.30 to Rs130.10 and contributed 109 points to the total index’s decline with 20.789 million shares being the volume leader of the day.

BMA Capital report endorsed that selling pressure in OGDC depressed market sentiment and triggered panic selling in the majority of the index favourites. PSO and POL were the exceptions and maintained to close in green.

Market started its operations in green and ended up first session with 69 points in the positive column. Second session maximised intra-day gains by 95.71 points to 10,945.75 level in the closing hours. Panic selling in OGDC at eleventh hours put index down to the red.

Ahsan Mehanti of Shahzad Chamdia Securities contradicted with the research report foreseeing OGDCL EPS low. He said EPS of the scrip would record at or around Rs12. He argued that OGDCL EPS for the first quarter, ended on September 2006, stood at Rs2.87 and simple calculation (e.g. Rs2.87 x 4 quarters = Rs11.48 EPS for FY07), he added.

He maintained that KSE notification to its members regarding in-house badla conversion to regular CFS created bad sentiments as members now cannot pledge their shares for acquiring funding, but to put them in CDC blocked account.

The other analysts were of the view that the elimination of CFS netting against ready market from November 23, increased the brokers’ margins that made them worried. However that would be introduced in phased manners, they agreed.

They maintained that the revised risk management measures are too technical and hard to understand at investors’ level that is why market players were participating at low pace in the market.

Across-the-board battering was also witnessed in notable exploration, banking and cement scrips. Hefty selling pressure was evident in POL and PPL as these scrips closed 2.9 per cent and 3.7 per cent lower from their intra-day highs.

After remaining in the positive zone during the four sessions, the telecom giant PTCL depicted 1.9 per cent decline to close at Rs47.05.

The volume in the ready market improved significantly to 231.025 million shares as against 161.298 million shares recorded a day earlier. On the contrary, the overall market capitalisation declined by Rs34 billion to Rs2.953 trillion.

The broader market remained somehow balanced, as 135 scrips advanced and 131 declined, while the value of 42 scrips remained pegged.

Forward Counter: OGDCL led the list of actives on this counter, deprived of Rs6.55 at Rs130 on 13 million shares followed by NBP which lost Rs1.75 at Rs263.25 on 11 million shares, POL surged by Rs1.25 at Rs349 on five million shares, PPL fell by Rs5.50 at Rs237.80 on five million shares, PICIC increased by 70 paisa at Rs73 on four million shares.

Source: The News