RECODER REPORT
KARACHI: Bears dominated the Karachi share market Monday on panic selling after a major slump in global stocks. The benchmark KSE-100 index lost 640 points to close at 35,175 points compared to 35, 815 points Friday.
The reason for the market correction due to the following reasons:
a) Fall of international global stock in the emerging markets, specially China; b) Last week of the month being settlement of futures wherein old contract swapped with due contract; c) A fall in bank stock due to turmoil among retailers agitating against withholding tax levied on non-filers; and d) The adverse effect of floods on food inflation.
Ahsan Mehanti, analyst at Arif Habib said stocks battered at KSE on panic selling after a major slump in global stocks and commodities. “Investor concerns over the impact of floods in the country and a plunge in crude prices near $47 per barrel played a catalytic role in the bearish activity despite new SBP policy rate corridor slipping to 6.5pc and hopes for favourable CPI Inflation data for Jul’15 expected later next week,” he added.
Trading activity remained low and overall some 570 million shares were traded on the ready counter compared to 683 million in the last session. Trading took place in 389 companies, of which 52 closed in green zone, 324 in the red and the share prices of 13 companies remained unchanged. Following a negative trend, trading value decreased by 17.5 percent to Rs12.7 billion down from 15.44 billion.
Major activity was witnessed in Silk Bank (R), Telecard Limited, Pace (Pak) Limited, Pervez Ahmed and Quice Food with traded volume 66.6 million, 25.6 million, 24.8 million, 24 million and 23 million shares respectively. Market capitalisation fell by Rs 122 billion to Rs 7.591 trillion Monday down from Rs 7.713 trillion Friday.
According to Mohammad Rizwan, Vice President of Topline Securities, in line with fall in global markets, Pakistan equities lost 639.71 points or 1.8 percent, which is the steepest fall after a gap of 17 weeks.
He said the market also remained under pressure due to roll-over week. As a result, PAEL, ENGRO and DGKC declined by 2.3-3.8 percent. Falling crude oil prices affected the index. Oil and Gas Index fell 2 percent, while small and mid cap stocks like Ghani Automobile Industries (GAIL), NetSol Technologies (NETSOL), Crescent Star Insurance (CSIL), Merit Packaging (MERIT), Byco Petroleum Pakistan (BYCO) and Dewan Cement (DCL) that rallied in last few weeks fell sharply and closed at their lower limits, he added.
Analysts at JS Research said that bears dominated the market Monday to close at 35,175 points level, down by 1.8 percent.
Start of the futures roll-over market brought selling pressure to the market given hefty positions in futures market. Another reason for the bearish momentum was pressure from international markets as Shanghai composite index tumbled 8.5 percent, its worst decline since June 2007.
Cement and fertilizer sectors witnessed a bloodbath due to SBP’s decision to keep policy rate unchanged as LPCL, MLCF, FCCL and FFBL closed down by 5 percent, 4.8 percent, 2.2 percent and 4.9 percent, respectively.
Oil sector continued to weaken as OGDC, PPL and POL closed down by 2.2 percent, 1.6 percent and 1.1 percent respectively. KEL closed down 2.8 percent as the company was issued a show cause notice by NEPRA. Moving forward they are expecting the market to remain under pressure due to the futures roll-over week.
Colgate Palmolive and Jubilee Life Ins were the top gainers with Rs 50.00 and Rs 22.85 to close at Rs 1,650.00 and Rs 479.86, respectively. Nestle Pak and Wyeth Pak Ltd. were the top losers with Rs 100.00 and Rs 34.00 to close at Rs 10,500.00 and Rs 2,500.00, respectively.
