Market watch: Political uncertainty gets the bears moving

KSE-100 falls as investors worry about judiciary, executive showdown.

KARACHI:

Equity prices fell at the Karachi Stock Exchange (KSE) on Friday as political uncertainty weakened the resolve of local participants.

Sellers dominated the week’s last trading session as the benchmark KSE 100-share index shed 81 points to close at 12,045.

The already tense relations between the ruling Pakistan Peoples Party (PPP) and the Supreme Court took a nosedive after PPP called for a strike across Sindh on Friday against the apex court’s verdict invalidating the appointment of the National Accountability Bureau chief.

Six people were killed and at least 13 vehicles torched after a wave of violence took over Karachi on Thursday night following the decision.

A hefty outflow of $7 million in foreign investment on Thursday further weakened the sentiment, said Topline Securities equity dealer Samar Iqbal.

Market volumes mirrored investor disinterest as only 67.5 million shares changed hands compared to 103 million traded on Thursday.

Surprisingly, the commencement of margin trading system from Monday did not have any impact on share prices at the weekend session, added Iqbal.

She added that despite prospects of increased activity in coming sessions, political uncertainty over the rift between coalition partners of the government kept investors uneasy.

The broader market also appeared jittery as out of 654 actively traded stocks, only 97 advanced while 146 declined and 411 remained unchanged.

Consistent inflows of foreign investment, particularly in Oil and Gas Development Company (OGDCL), have contributed heavily to the market’s rise in recent months. Analysts assert that this trend appears to be reversing, casting shadows over bullish sentiments.

Oil stocks led the fall in the last trading session of the week with Pakistan Oilfields dropping 1.2 per cent and Pakistan Petroleum Limited down 1.15 per cent.

The Securities and Exchange Commission of Pakistan has amended the categorisation of open-end collective investment schemes, paving the way for non-banking finance companies to take part in the margin trading system (MTS) and margin financing system (MFS) as financiers.

A circular posted on the KSE website on behalf of the apex regulator announced the change, however, so far SECP has excluded money income funds from participating in the leverage products.

Lotte Pakistan PTA was the volume leader with 12.71 million shares, falling Rs0.21 to finish at Rs15.86. It was followed by Fauji Fertiliser Bin Qasim with 5.03 million shares, gaining Rs0.03 to close at Rs43.31 and Arif Habib Corporation with 4.78 million shares, crawling up Rs0.05 to close at Rs23.43.

Published in The Express Tribune, March 12^th, 2011.