KARACHI
Based on multiple rumours, the KSE-100 index posted one of the largest fall of 1031 points or 3.5pc to close at 28,927 points, 7 month low.
The market on Monday continued to free fall with no one willing to catch the proverbial “falling knife” as a myriad of reasoning and logic were muttered to explain the melt down.
Speculation of clients margin selling, unsettled futures settlement and local funds’ redemptions caused panic like situation at local bourse where most of the stocks closed at 5pc lower limit. From its recent peak KSE-100 Index is now down 17pc while Rs1.39 trillion/ $13.9b has been eroded from market capitalisation, said Samar Iqbal VP at Equity Sales Topline Securities.
Recovery in global markets also failed to provide any support to local equities where foreigners have remained net sellers of $131m in last 3 months.
Reasons doing the rounds in the grapevine included resignation and withdrawal of resignation by a major political leader, local mutual funds facing redemptions, unbridled foreign selling and large futures positions from the March contract being unable to shift completely to the next contract and hence being forced to sell-off in the normal market, observed analyst Ovais Ahsan at JS Global.
The reason for the fall is probably a lethal cocktail of all the above mentioned rationale but none of the causes affect the fundamentals of the stocks being mercilessly hammered hence value investors should start fishing for bargains. Foreign portfolio flows will though dictate over all sentiment and a couple of days of healthy inflow will give back shattered confidence back to local investors, he added.
Analyst Ahsan Mehanti stated, KSE stocks witnessed bearish activity across the board in the 5th straight session on foreign selling, provincial political uncertainty and redemption calls on institutional investments on weak earnings outlook.
Falling crude prices after Iran nuclear deal and bearish trend in global commodities impacted the sentiments leading to a record one session fall in KSE 100 index to a 7-month low ignoring IMF approval on 5th tranche of $501.4m amid satisfactory economic review and recent Moody's Upgrade on Bond Ratings to positive, the market watchers observed.
APP adds from Lahore: Lahore Stock Exchange Monday witnessed bearish trend by loosing 285.30 points, as the LSE-25, which opened at 4953.03 points, closed at 4667.73 points.
The market's overall situation, however, corresponded to an upward trend as it remained at 1.339 million shares to close against previous turnover of 667,100 shares, showing an upward move of 672,100 shares. While, out of the total 67 active scrips, only one moved up, 31 shed values and 35 remained equal.
The major gainer of the day was Packages Limited which recorded increase in per share value by Rs 25.81. Pakistan State Oil Company Limited, Fauji Fertilizer Company and Masood Textile Mills Limited lost their per share value by Rs 11.16, Rs 6.00 and Rs 4.76 respectively. Top three volume leaders of the day included The Bank of Punjab Limited with 647,500 shares, Silk Bank Limited (Saudi) with 144,000 shares and Dewan Farooq Motors Limited with 143,000 shares.
SECP asks stock markets to immediately dispel rumours
OUR STAFF REPORTER
ISLAMABAD
Securities and Exchange Commission of Pakistan (SECP) Chairman Zafar Hijazi has asked the stock markets management to remain alert and always immediately dispel/clarify any rumors pertaining to the stock exchanges. Further, he asked the stock exchanges to promptly report any unusual activity to the Commission.
In a letter addressed to the managing directors of Karachi, Lahore and Islamabad Stock Exchanges, Hijazi asked them to closely monitor and exercise senior level oversight to ensure that all risk management measures are complied with, including collection of margins in a timely manner.
While referring to the volatile bearish trend in stock markets, he said that it is important that stock exchanges being the front line regulators play a proactive role in ensuring smooth and uninterrupted market operations. Chairman SECP advised them to maintain close coordination with the SECP and submit daily reports to confirm collection of margins including the market-to-market losses as per the regulations. He reiterated that in order to ensure integrity of the market, the SECP will continue to take measures for investors' facilitations to boost their confidence.