KARACHI: The market fell sharply over plunging international and regional markets, uncertainty over the forthcoming budget, political tension about the NRO case and North Korea’s military mobilisation for possible combat.
The KSE-100 lost 259 points to close at 9,428.44. This is after losing 183.8 points in the previous trading session and witnessing its sharpest decline in 30 weeks, losing 400.55 points last week ended May 21. The market dropped to 9,357 points before regaining 71 points in the last hour of the session to end at a two-and-ahalf month low.
The last time it ended in this range was on March 3 at 9,419.43 points. However, trading activity was up as volumes increased 85 per cent on Tuesday to 135 million shares as compared to Monday’s 73 million. “The market followed suit as all major Asian & European stock markets went tumbling,” said JS Global Capital analyst, Faiza Naz. She added that the market had opened in the negative today because of news that North Korea’s military had been ordered to prepare for possible combat.
Investors were uncertain about the fiscal budget for 2010/2011 that would be announced on June 5, she added. The government may announce the replacement of a General Sales Tax with Value Added Tax in the budget, as required by the International Monetary Fund. Analysts are wary about its impact because they say the government has not done enough to make taxpayers aware of what it entails. “Local investors are nervous about what measures may be announced in the upcoming budget,” said Sajid Bhanji, a broker at dealers Arif Habib Ltd.
The Supreme Court’s summoning of Law Minister Babar Awan because of the delay in the re-opening of the graft cases against President Asif Ali Zardari has also affected investors. Bhanji said that the current political scenario made local investors nervous. “Heavy selling across the board was witnessed in all major scrips as investors adopted a cautious stance over a plunge in international and regional markets. Furthermore political uncertainty over the NRO case also restricted investors into holding their positions, pushing the market to fall by more than 3 per cent at one stage. However some cherry picking was witnessed by investors in the end due to attractive valuations,” said Topline Securities analyst, Furqan Punjani.
Trading was mixed with few blue chip stocks being traded, Exchange value stood at 5.3 billion up 77.3 per cent on Tuesday as compared to Monday’s Rs2.99 billion. During the day’s trade, 72 stocks closed higher, 352 declined and 11 remained unchanged in value. “Buying interest was witnessed in PTC, PPL, POL & ENGRO,” said Naz. LOTPTA was the volume leader today, same as yesterday, with 14.4 million shares traded. Its stock decreased by Rs0.63 to end at 9.10. Yesterday it had 12.72 million shares and had gained Rs0.03 to close at Rs9.73. TRG Pakistan was the second volume leader with 6.4 million shares. Its stock went down by Rs0.34 to end at Rs4.64. Yesterday it had been the second volume leader as well with 5.37 million shares gaining Rs0.09 to close at Rs4.98.
Published in the Express Tribune, May 26th, 2010.