KARACHI: The Karachi stock market closed on Wednesday deep in the red, as rumours regarding the rejection of an increase in the Gas Infrastructure Development Cess – which had lead to hurried buying in fertiliser scrips yesterday – proved unfounded; considerably souring investor sentiment.
Additionally, Arif Habib Corp Director Ahsan Mehanti reported that: “Stocks closed bearish amid thin trades on investor concerns over [the] unstable macroeconomic situation and falling rupee dollar parity following [a] statement by [the] State Bank chief on economic challenges.”
The Karachi Stock Exchange’s (KSE) benchmark 100-share index plunged 1.42% or 200.10 points to end at the 13,871.75 points level.
“Proposals for [an] increase in gas development cess for [the] industrial sector, fall in global stocks and commodities on [the] Euro-zone debt crises, and limited foreign and institutional support played the role of catalyst in already bearish sentiments in stocks across the board,” added Mehanti.
Trade volumes fell to 129 million shares compared with Tuesday’s tally of 160 million shares. The value of shares traded during the day was Rs5.64 billion. Shares of 367 companies were traded on Wednesday.
“Engro Corp and Fauji Fertilizer remained out of favour as the proposed [tax] hike will dent bottom-line and remains a key investor concern. Oil names traded against the market trend with Pakistan Oilfields and Pakistan Petroleum dominating proceedings on rumours that production from a key hydrocarbon field [at Makori East-02] will be better than earlier estimates; while the latter is also seeing interest on hopes of [a] stock dividend announcement,” said Elixir Securities analyst Faisal Bilwani.
Bankislami Pakistan was the volume leader with 15.51 million shares losing Rs0.62 to finish at Rs11.42. It was followed by Engro Corporation with 9.28 million shares losing Rs5.20 to close at Rs108.50 and DG Khan Cement with 8.71 million shares losing Rs1.65 to close at Rs41.49.
Foreign institutional investors were buyers of Rs414.77 million and sellers of Rs150.77 million, according to data maintained by the National Clearing Company of Pakistan Limited.
“Overall the market was in correction mode with volumes of 129 million shares, mainly due to the uncertainty before the budget [announcement] on June 1, 2012,” observed JS Global analyst Mujtaba Barakzai.
Published in The Express Tribune, May 31st, 2012.