Market watch: Local bulls lock horns with foreign bears

Bears and bulls lock horns at the KSE with neither prevailing by the end of the day’s trade.

KARACHI:

Bears and bulls locked horns at the Karachi Stock Exchange (KSE) on Thursday, with neither prevailing by the end of the day’s trade.

The benchmark KSE-100 index dropped just 2.36 points to close at 12,125.79 points as investors took cue from another round of selling in regional markets.

Market sources highlighted that local participants appeared enthusiastic in select stocks, despite selling from foreign investors. Market volume inched higher, as 103 million shares changed hands, compared with 100 million shares on Wednesday.

Fertiliser stocks, which had carried the previous day’s rally, saw modest reduction in prices, with the exception of Fauji Fertiliser, which continued to witness gains.

Topline Securities equity dealer Samar Iqbal pointed out, “Lotte Pakistan provided more than a fourth of the overall volume, as 29.8 million shares of the company were traded during the day.” The analyst attributed the high interest in the stock to improved margins and approaching payout of five per cent.

“Participants appear to be in a positive frame of mind with regard to the upcoming launch of margin trading system (MTS),” commented Arif Habib Investments Director Ehsan Mehanti.

“However, investors opted for cautious trade, given the prevailing uncertainty in local politics and falling foreign capital markets,” he added.

Friday will be the last day of trade before introduction of MTS and margin financing system in local exchanges. Brokers expressed varied opinions regarding the impact of the introduction of leverage products.

Speaking to The Express Tribune, market stalwart Aqeel Karim Dhedi opined that leverage will be immediately successful in improving market participation. However, National Clearing Company of Pakistan Chief Executive Officer Muhammad Lukman appeared more cautious, saying, “investors will take some time warming up to the three new products and we expect a gradual increase in their acceptance and use.”

Regardless of the pace of acceptance of leverage products, analysts are hopeful that market volumes will register an upward trend in coming days as higher numbers of retail investors take advantage of leverage to assume stances in various stocks. Shares of 654 companies were traded on Thursday. At the end of the day, 132 stocks closed higher, 149 declined and 373 remained unchanged.

Lotte Pakistan PTA was the volume leader with 29.8 million shares, gaining Rs0.24 to close at Rs16.07. It was followed by Fauji Fertiliser Bin Qasim with 6.9 million shares, losing Rs0.32 to close at Rs43.28 and Pakistan International Airlines with 5.2 million shares, gaining Rs0.29 to close at Rs2.83.

Published in The Express Tribune, March 11^th, 2011.