KARACHI (January 22 2003) : The KSE-100 index on Tuesday registered a substantial decline of 125 points in a single session, largest after almost seven months, because of overbought situation, lack of support from the financial institutions and hasty selling from leading brokerage houses, thus unnerving the smaller segment.
The KSE-100 index plunged 125.60 points, or 4.30 percent, to 2,795.03 points from 2,920.63.
The volume amounted to 423.871 million shares, against 444.364 million shares of Monday.
The market opened on a positive note but selling pressure pressed the panic button and the index hurtled by as much as 90 points during the intraday trading.
The selling triggered on rumours that some of the members of the KSE and LSE have defaulted, Securities and Exchange Commission has issued a circular banning the badla system and Hubco is to announce dividend after two months, instead of earlier expectation of February, an analyst said.
The bulls were reluctant to let go of their gung-ho attitude, as the market opened with a huge positive margin.
Despite the demo given in the preceding session over the susceptibility of the market to undergo a healthy technical correction, the higher opening provided greed a chance to advocate the general sentiments, an analyst, Zia Javed, from WE said.
The panic button was primarily hit after carry-over (badla) mark-up rates shot up late in the evening in upcountry bourses, exposing the heaviness of the market.
The bears came back with a vengeance, annihilating all bullish support barriers across the board, as the index spearheaded through two major psychological levels of 2900 and 2800 levels respectively.
The magnitude of the high index had dawned upon the weak holders, as the unprecedented bearish carnage spawned a stark change in general sentiment.
Finally, when the tempest was over, it a was all a lower-circuit affair. Almost all major blue chips and the futures counter had switched on their lower circuit breakers for the day.
To make a long story short, hopes for achieving the 3000 target had vanquished. The proceedings ended on a negative note.
The advocacy of the bulls was eventually given a taste of their own medicine. The perversely steep decline heavily injured the investor confidence, which seemed robust at the beginning of the week.
It was believed that the tremendous correction of 5.40 percent in two consecutive sessions was likely reverberate for another session. However, the toning down of the carryover market seemed to indicate the probable cessation of the downward drive.
Hasnain Asghar of Aziz Fidahusein said that the heavy badla and internal issues of capital adequacy and exposures invited offloading from the carryover market and the market men offloaded to the limit of circuit breakers.
The index saw a correction of 93 points and consolidated around 2850.
Although the KSE-100 found institutional support, the carryover float never allowed the market to settle.
The last-minute selling led to a closing of 125 points. Technically, the market is expected to consolidate around 2775-2800 as the upcoming results of leading petroleum and fertiliser stocks might allow the bulls to re-enter the market on Wednesday.
Raheel Moosani of Moosani Securities said that energy, fertiliser, telecom, insurance and banking sectors stayed under tremendous pressure in both regular and forward counters and consequently most of the scrips of these sectors hit their lower circuit breaker limit.
Immense selling pressure jolted the bourses while jobbers and retailers failed to react to the situation and offloaded their weak holdings in a rather hasty manner while others simply joined the bandwagon and divested their weak holdings.
Hubco on a turnover of 119.149 million shares shed Rs 1.95 to Rs 37.65; PTCL shed 80 paisa to Rs 24.15 on business of 92.854 million shares; FFC Jordan lost Re 1 to Rs 12.20 on a volume of 32.114 million shares; Sui Northern Gas finished at Rs 1.10 to Rs 25.50 on trading of 31.988 million shares; and PSO moved down to Rs 226.95 from Rs 238.85 as around 23.297 million shares changed hands.