Panic selling did not only come from local investors but also from foreigners who sold $5.4 million worth of shares during the week ended on February 25.
The stock market’s benchmark 100-share index closed down seven per cent to 11,224 points. The intensity of the pressure was so high that the KSE-100 index fell by 300 points in intraday trade on more than one occasion.
Ongoing tensions in the Middle East triggered a rally in international commodity prices, raising concerns of its impact on the country’s macros, said analysts.
The week saw Libya’s exports of its valued 1.6 million barrels a day of light sweet crude mostly shut down, with the ongoing insurrection against Moammer Qaddhafi showing little sign of early resolution and oilfield personnel being evacuated.
Worries about the impact of Libyan revolt on oil prices took the froth off US and other world stock markets during the week.
Tech-heavy US Nasdaq index lost as much as 4.2 per cent while the UK benchmark FTSE-100 index slipped 1.34 per cent during the week.
On the local front, PML-N expelled PPP from the coalition government in Punjab as a first step in an anti-government campaign. This came on the back of failure of the government to implement a 10-point reforms agenda, including the accountability bill and NRO-related issues.
While the fiasco in domestic politics may continue for some time, the real market sentiments will be determined by the outcome of the Raymond Davis case and fears of hiccups in Pak-US diplomatic relationship. Raymond Davis, a US official, was arrested on January 27 on the charge of killing two men in Lahore.
Average volume of the market went up by 21 per cent at 98 million shares, whereas average traded value stood at $47 million, up by a respectable 24 per cent.
Outlook
Foreign portfolio investment is likely to be the centre of attention for investors. On the political front, with PML-N deciding to remove PPP from the Punjab government, political noise could play a role in shaping sentiments. However, the market will also keep an eye on Pakistan’s negotiations with the International Monetary Fund. An IMF team is expected to visit on March 1.
Monday,February 21
The stock market recorded another lacklustre session as investors preferred to stay on the sidelines before the launch of margin trading system and clearance of prevailing political uncertainty. The KSE benchmark 100-share index ended 1.26 per cent or 76 points lower at 12,041.42.
Tuesday,February 22
The stock market plummeted to its lowest level in 10 weeks following massive battering of world markets in the wake of unrest in the Middle East. The KSE benchmark 100-share index was 2.64 per cent or 315.3 points lower at 11,711.29.
Wednesday,February 23
The bourse continued to tumble on foreign selling as stock markets around the world remained under pressure from the Middle East crisis. The Karachi Stock Exchange benchmark 100-share index ended 1.08 per cent or 125.96 points lower at 11,523.4, its lowest since December 7, 2010.
ThursdayFebruary 24
The stock market ended up after a five-day bearish spell as investors accumulated energy stocks following a rise in international oil prices. The Karachi Stock Exchange benchmark 100-share index ended 0.14 per cent or 15.84 points higher at 11,539.26.
Friday,February 25
The stock market tumbled more than 300 points, the biggest daily fall in nearly six months, on a decline in regional markets and local uncertainty. The Karachi Stock Exchange’s benchmark 100-share index ended 2.74 per cent, or 315.74 points, lower at 11,123.52, its lowest close since December 1.
Published in The Express Tribune, February 27th, 2011.
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