Market resumes downward spiral

Pakistan’s market resumed its downward trend after Wednesday’s slight recovery. In the nine last trading sessions, it only went up once, in the previous day’s session by 183.11 points. The market lost 442.8 points on Monday and Tuesday, more than the 400.55 points it lost last week.

On Thursday, the KSE-100 lost 171.58 points to end at 9,411.57.

Volumes decreased by 4.83 per cent to 103.8 million from 109.1 million on Wednesday. Volumes were almost flat, said JS Global analyst, Sameer Danawala. All share index exchange value was at Rs4.05 billion. A large volume of bank shares were traded, and blue-chip stocks remained under pressure, said Danawala.

“Rumors of broker defaults and possible offloading by a large local institution continued to dominate the market and owing to the fluid situation and very little buyers before next week’s budget, stocks continue to decline prompting further margin calls,” said Elixir Securities analyst Sara Shahid.

Banks witnessed most of the selling ahead of the budget probably on proposal to tax banks that enjoy spreads in excess of 5 per cent.

Market sentiment remains weak as uncertainty prevails over a number of budget worries on taxation issues like the Value Added Tax (VAT) and the imposition of the Capital Gains Tax (CGT).

This week, Pakistan received another instalment for $288 million as part of Coalition Support Fund (CSF), boosting much needed fiscal support.

Lingering issues such as energy  sector  circular  debt,  power  outages,  sticky  inflation  still remain, said Shahid.

“The local bourse witnessed another dull session due to lack of local interest and foreign selling. Further, budget related uncertainty continued to hamper market sentiments as investors preferred to sit back before budget,” said Topline Securities analyst, Furqan Punjani.

“The market opened on a positive note, but rumours of selling by foreign investors dampened the sentiment later,” said Danawala.

Most of the stocks that were volume leaders went down. Out of the 440 stocks which were traded during the day, only 122 were up, 307 were down.  The price of 11 stocks remained unchanged.

Danawala pointed out that all the heavy weights except OGDC remained under pressure PTC closed at Rs19.86, down 3.7 per cent with 3.9mn shares traded.

The banking sector was under pressure for most of the day as both NBP and MCB declined by 4.4 and 3.6 per cent respectively.

The National Bank of Pakistan was the volume leader with 8.2 million shares traded. Its stock price went down by Rs2.89 to close at Rs62.34.

Lotte Pakistan was the second volume leader with 7.4 million shares traded; its price went down by Rs0.39 to close at 9.17. Lotte Pakistan has been one of the volume leaders for the fourth day in a row with.

Published in the Express Tribune, May 28th, 2010.