Market awaits for approaching new lows

The Pakistani stock market closed on Friday the last     day of the trading week (May 05-09, 2008) under     review at 14229 point with an decrease of 444     points with reference to the closing of the market   at14674 points on May 05, 2008, the first day of the trading week under review and 728 points down in comparison with the closing of the market at 14957 points on the previous Friday April 02, 2008, the last working day of the previous trading week. The downslide on the stock market continued on Friday, the last day of the trading week under review as investors again liquidated their long positions on the overvalued counters sowing to the prevailing turmoil on the currency markets and the weakness of the rupee. The 100-share index was off 160 points at 14,228.67.
The massive erosion in the value of the rupee against the dollar during the current week had send distress signals among the stock traders amid fears that its negative impact could also cause a major jolt to the share business as both were co-related in more than one ways, said a floor broker.
The market closed the weekend session on an easy note as investors continued to unload long positions on the overvalued sectors but instances of selective buying at the dips were not lacking. The 100-sahre index had suffered a new sharp fall of 159.85 points at 14,228.67, breaching through two consecutive barriers as compared to 14,388.52 a day earlier as leading base shares fell further on renewed selling. The 30-sahre index was off 1.67 per cent or 283.93 points at 16,768.16 points. The run on the dollar dealt a fresh serious blow to the already under pressure rupee, which was late in the evening quoted around Rs68 or above on the open market, analysts said. "Investors sold stocks were there were still some margins to avert further erosions in the value of their holdings and sat on the sidelines watching the slide of the rupee," they said, adding, "But the offices of private currency dealers were closed as there was no dollar to be sold".
The massive weakness of the rupee (about nine per cent) during the last couple of weeks caused by inflated oil import bill, which hit a record level of $124 per barrel, has its bearing on the already massively mauled stock market as was reflected by falling prices.
"Over the week, since the rupee maintained its downward drift, the KSE 100-share index has lost about 700 points, the total during the last two consecutive weeks amounting to about 14,228.67 points or 10 per cent, eroding Rs185 billion from the market capital," said a leading broker. Apart from the weakness of the rupee, some political depressant notably reinstatement of judges, budget uncertainties and the absence of foreign investors also dampened the underlying sentiment. Minus signs again dominated the list under the lead of EFU General and Attock Petroleum, off by Rs20 and Rs15.95, respectively, followed by MCB Bank, JS & Co, Adamjee Insurance, Central Insurance, EFU General, Attock Petroleum, Millat Tractors, Engro Chemical, Packages, and Grays of Cambridge, which suffered fall ranging from Rs10.60 to Rs15.95. But on the other hand Fazal Textiles and Pakistan Services managed to finish higher by Rs24.31 and Rs20, respectively, on stray support. Other prominent gainers were led by Arif Habib Seurities, Javedan Cement, KSB Pumps, Indus Motors, Colgate Pakistan, Wyeth Pakistan, Sapphire Fibres, Atlas Battery, and EFU Life rose by Rs5.15 to Rs19.25.
Trading volume fell to 181m shares from the previous 199m shares as losers held a strong lead over the gainers at 197 to 99, with 25 shares holding on to the last levels.
Arif Habib led the list of actives, higher by Rs6.57 at Rs185.70 on 17m shares followed by OGDC,off Rs2.20 at Rs130.40 on 13m shares, D. G. Khan Cement, up by Rs1.11 at Rs126.51 on 8m shares, Nishat Mills, off Rs1.23 at Rs108.50 on 7m shares, Engro Chemical, sharply lower by Rs10.60 at Rs320 on 6m shares, Pakistan Oilfields, off Rs3 at Rs415 on 6m shares. MCB Bank followed them, off Rs10.65 at Rs355 on 6m shares but on the other hand National Bank, rose by Rs1.80 at Rs216.75 on 5m shares and Attock Refinery, which was also market down by Rs6.85 at Rs285.25 on 6m shares.
The KSE 100-share index on Monday plunged by 284 points or about two per cent at 14,673.13 on near-panic selling triggered by conflicting statements by the major coalition partners on the issues of reinstatement of judges amid fears of breakup of the newly formed government at the centre.
But Faisal A. Rajabali, a leading stock analyst, observes that it is essentially the weakness of the rupee, which is causing a massive outflow of the foreign funds invested in the share business. Together with the budget uncertainties, it seems to be the chief reason behind the market's current stance, he added. The reports of Rs13 billion frauds at Bank of Punjab and arrest of its top also had its toll owing to sympathetic selling in those shares having link with it in one form or the other. Its share value was off Rs2.90 at Rs55.10 on 16m shares. The breach of three consecutive barriers in a session, which wiped out Rs86 billion from the market capital, is very significant and, the analysts said, the plunge may continue in the coming sessions also if sanity will not return to the contenders of power.
At one stage the 100-share index was down by a massive 428 points at 14,530.30 points but late short-covering by some of the leading financial institutions on selected counters pushed it well above the session's lows.