Market watch: Stock market takes a beating

KSE’s benchmark 100-share index plummets 193 points.

KARACHI: The stock market took a beating after a long time on Thursday following signs that the fertiliser industry earnings will drop massively in 2012.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 1.32 per cent or 193.40 points to end at the 14,420.19 point level.

Analysts believe if prices are reduced by Rs150 per bag across the board, Fauji Fertilizer Company (FFC) and Engro Corporation earnings will fall by 17% and 24% in 2012. FFC reduced urea prices by Rs150 per bag on Thursday – with Engro likely to follow suit – to make its fertiliser competitive against the imported counterpart, which stands at a much cheaper price.

Stocks reacted sharply to the news as banks and oil stocks also lost grounds, said JS Global Capital analyst Murtaza Jafar.

Trade volumes fell to 269 million shares compared with Wednesday’s tally of 319 million shares. Pakistan State Oil weathered the selling climax after news of government looking for alternatives to inject fresh money to settle the rising circular debt temporarily.

Adamjee Insurance Company closed at its upper limit of the day after the announcement that the company is seeking the approval of its shareholders to invest Rs3.51 billion to purchase shares of MCB Bank in the next three years, added Jafar.

Pakistan Telecommunication Company Limited was the volume leader for the sixth straight day with 31.45 million shares declining Rs0.87 to finish at Rs15.33. It was followed by DG Khan Cement with 28.60 million shares firming Rs0.61 to close at Rs46.83 and Lotte Pakistan PTA with 25.71 million shares falling Rs0.17 to close at Rs9.77. Foreign institutional investors were buyers of Rs891 million and sellers of Rs717 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, May 11^th, 2012.