Share prices fall more than 4 percent

Posted on 04.18.05 by StockPK Team @ 2:13 pm    

Share prices suffered yet another massive fall and saw widespread declines across the board where heavyweight scrips were the main losers and the index lost 400 points as bears tightened their stranglehold. The KSE-100 index registered a drop of 401.50 points, or 4.23 percent, to 9097.92 from 9499.42. The volume declined to 154 million shares down from 456 million shares. The market capitalisation decreased to Rs 2.485 trillion from Rs 2.589 trillion.

Tanvir Abid, head of research at Live Securities, said that continuation of the slide in the market could be attributed to the crisis in Balochistan, political uncertainty in Sindh and investors attempting to square their long March futures contracts. Volumes remained abysmally low.

Most scrips closed at their lower circuit level or very close to it. The intensity of this correction can be gauged from the fact that on Monday only 51 stocks advanced while 359 were in the negative zone.

The oil and gas sector, which constitutes almost 45 percent of the total index in terms of weightage, was mainly responsible for the massive rally during the last couple of months. However, reports of crisis in the energy-rich province, Balochistan, triggered the massive collapse.

OGDC and Pakistan Oilfields closed at their lower circuit level and Pakistan Petroleum Limited also lost 2.9 percent. Even positive news regarding privatisation issues and rumours of revaluation of assets of telecom giant PTCL did not spur any positive activity in the scrip. In fact, the scrip also closed at its lower circuit level.

Going forward, with the index losing more than 1500 points in less than a week, the overall sentiment remains depressed. Investors are advised to gradually initiate accumulation around the 8500-point level.

Ahmed Ashraf Sheikh from Akbarally Cassim said that panic selling was seen in the market since opening. However, the plight of retail players was further intensified as most of the scrips were stuck at their lower locks, with no chance to get out.

Punters seemed to have taken their hands off the market as no buying was seen in the heavyweights. Buying continued in PSO through the day as punters and institutions accumulated the scrip on privatisation related speculation. It is advised to stay on sideline from the market till a direction is seen.

The badla decreased by 1.18 billion rupees as limit down prices reduced the badla levels. The badla investors continued to exit where opportunities were available.

There was major badla reduction in OGDC by 8 percent limit down prices since early morning invited badla investors to offload their holdings. The badla rates continued to remain limit up, as financing is moving towards the futures market where higher rates are available.

The number of badla scrips has reduced to 11 with the exit of Muslim Commercial Bank last week. Hasnain Asghar from Aziz Fidahusein said that the pressure of heavily overbought March forwards (estimated at Rs 50 billion approximately) was felt on opening as absence of buyers in March created unrest among the buyers thereby disallowing the index to find support around 9270-9277.

Technically, the inability of the intdex to find support around 9270-9277 has placed next major support around 8700, while mild support stays at 8955-8967. It is, however, recommended to wait for the index to invite turnover as with March float still outstanding and absence of buyers in April forward, the market needs fresh funds to avert any major crisis.

Positive news of privatisation can, however, refuel the stakeholders with desired confidence in order to assure the marketmen of a healthy development in the coming months.

Pak PTA Ltd lost Re 1 to Rs 13.80 on turnover of 20 million shares; PSO fell to Rs 445 from Rs 451 on business of 19 million shares; D G Khan Cement lost Rs 3.50 to Rs 67 on trading of 11 million shares; PPL declined by Rs 8 to Rs 265 on deals of 9.8 million shares; and Hubco dropped Rs 1.75 to Rs 33.30 on transactions of 8.8 million shares.