LAHORE - Bears continued to tighten their grip as incessant foreign selling during the outgoing week forced the index to tumble to 16-week low. Though the market was below the psychological level of 11,000, yet to institutional buying at lower levels inched up the market to close at 11,028 level. The KSE-100 plunged by 3.8 percent WoW to 11,028 level while dismal volumes continued to prevail at the market (up 1.3 percent WoW). Shunning of equities by foreigners was witnessed yet again as they offloaded shares worth $11.2 million. Political temperatures rose to new heights after the validation of the controversial memo by Army Chief Gen Kiyani and ISI Director Gen Shuja Pasha in their reply to the Supreme Court. Moreover, deteriorating external indicators weakened the investor sentiment. Local investors seemed to be on the sidelines throughout last week due to on going uncertainty on the memo gate issue, stated Samar Iqbal, a stock market expert. According to her, import growth (20.2 percent YoY) outmatched growth in exports (7.6 percent YoY) owing to the rise in oil prices and fall in cotton prices. Overall, imports stood at US$18.45 billion while exports were reported at US$9.38 billion. Resultantly, trade deficit widened by 36.7 percent YoY to US$9.0 billion during 5MFY12 Furthermore, remittances in Nov-11 dropped by 9.1 percent MoM to US$924.9 million. However, in 5MFY12, remittances have jumped by 18.3YoY percent to US$5.23 billion. Furqan Ayub, another expert, pointed out that auto sales numbers were released for Nov-11, recording a massive decline of 21 percent MoM to 11,926 units. The decline in Nov sales were largely due to less working days and consumers delaying their purchases to take advantage of next years registration. Additionally, cement dispatches for Nov-11 depicted a decline of 23.3 percent MoM and 6.5 percent YoY to 2.26 million tons as seasonality and fewer working days in Nov took its toll. PPL, POL outperformed the market by 3 percent and 1 percent respectively, on expectations of production enhancements. Conversely uncertainty on gas related issues resulted in Engro and FFBL to underperform the market by 10 percent and 11 percent, respectively. Ahsan Mehanti, Director Arif Habib Investments, said that stocks closed sharply lower at KSE as rumors dominated the market sentiment as government, military and judiciary face memo controversy leading against army and national security. Experts said that they expect further decline in the index levels and after considering the double top formation that completed on Thursday they suggest a sell on strength strategy till 10,760. The benchmark index has found support at the multi year trendline which is currently at 11,140 (drawn from mid august 2010 - index level 9,488). 11,140 is also the bottom of the right inverted shoulder formed in August 2011 but the benchmark index closed just shy of the same. A reversal bounce is likely to meet resistance at 11,200 - 11,250. Technically speaking, OGDC and POL are the strongest among the lot and are also likely to lead the reversal rally. We have a sell call in MCB with a view to cover at next support. A likely level is 125. We also have a sell call in NBP. Sell on move below 39.70. Sell PSO at 230 with an aim to cover at 221. Experts said that contrary to popular perception, the prospect from Zin Block seems not to be encouraging. Our checks reveal that the company has hit reservoirs of low BTU gas on the main formation that can primarily be used for power generation alone. Earlier it was expected that the field could produce around 500mmcfd of gas, as suggested by the Minister of Petroleum. Subsequently, the company is testing upper formation and the news flows are expected to come by the end of December. With quality of gas discovered usable only after the installation of power generation, the development of the field will now hinge on the modalities of power generations plan in the nearby vicinity (setting up a power plant in Zin area or diverting the gas to Uch power plant).