KARACHI (January 24 2003) : Equities suffered a substantial decline for the second time this week as bears made heavy dents in the price structure, and the KSE-100 index lost yet another 122 points after the regulator, the Securities Exchange Commission of Pakistan (SECP), questioned exposure limits from some of the members.
The market on Tuesday suffered a decline of 125 points and on Thursday it underwent heavy selling-pressure, eroding 122 points further.
Since Monday, the index has fallen by 337 points or 11.4 percent, creating a panic among the retail investors.
Bulls were tired for the last couple of months while bears suffered no resistance, easily dominating the proceedings.
The KSE-100 index lost 121.62 points or 4.44 percent to 2,617.49 from 2,739.11 of Wednesday.
The volume amounted to 384.626 million shares as against 371.926 million.
The market capitalisation went down to Rs 577.281 billion from Rs 602.743 billion.
The dream of market pundits, analysts and traders that the index will test 3,000 level has been shattered.
The selling pressure has ignited, and punters sold their shares to avert any further losses.
The retail investors once again became panicky and offloaded their positions, which fuelled further selling in the market.
One of the biggest reasons for the current crash-like situation is the letter sent by the SECP to 19 stock brokers that they are violating their exposure limit.
They are above the ceiling allocated to them and are hovering above the permissible limit.
These brokers will reduce their exposure limits sold their holdings, which resulted in hasty selling from the retail investors, plunging the index by such a volume, a dealer said.
Hasnain Asghar of Aziz Fidahusein, said the reduction in badla value and quantity re-invited the bulls and the market registered a surge of 26 points during the initial hour.
The issuance of letter of capital adequacy directly by the SECP created panic amongst the punters as well as their brokers, and the early gains were wiped off, and the KSE-100 landed in the negative territory.
The presence of institutional buying in the running stocks and healthy announcement by PSO failed to restrict the free fall.
Although the yields continue to increase, but the constant increase in capital losses have forced the holders to sell.
The overall decline of 337 points has pulled the market from overbought to neutral and oversold position.
Therefore, the recommendation for cautious buying continues with a months view while intraday traders are recommended to wait for the market to consolidate. Technically, the levels of 2550 and 2590 can be seen for accumulation.
The upcoming corporate announcements and pre-bid moot of PSO accompanied by healthy results will tempt funds for the rally.
Raheel Moosani of Moosani Securities, said that bears continued with their onslaught as market throughout the day remained under tremendous pressure lost its another important psychological barrier of 2,700 levels.
The market, however, started the day on a positive note and gained almost 25 points, but the market listlessness abruptly scared bulls from the bourses and allowed bears to once again held the market control.
All the leading stocks like PSO, Hubco, PTCL, Fauji and Engro Chemical stayed under pressure followed by sideboard stocks that also lost their share value.
PSO announcement, however, failed to turn market sentiment as the market throughout the poor trading interest and stayed lacklustre.
The bullish rally have certainly run out of steam in this week as investors are not convinced about the long-term durability of a rally because nothing has changed in the economy.
The current bearish sentiments if not removed, the market performance would be capped further.
Hubco on a turnover of 141.121 million shares lost Rs 1.60 to Rs 35.40, PTCL on a trading of 71.932 million shares suffered a decline of Rs 1.05 to 22.75, PSO moved down to Rs 206.65 from Rs 217.50 on a business of 22.969 million shares.
Sui Northern Gas closed at Rs 23.20, ie lower by Rs 1.20 on volume of 17.715 million shares and FFC Jordan denoted a fall of Re 1 to Rs 10.80 as around 15.687 million shares changed hands.