Uncertainty regarding implementation of Client Level Netting (CLN) from March 5 extended the bearish spell at the stock market on Wednesday, whereas the officials confirmed implementation on schedule.
The market started off on a strong negative note and remained under heavy selling pressure for the third consecutive day. The KSE-100 index hit the intra-day low at 11,158.12 points, but closing at 11,179.97 points with a loss of 196.15 points.
The KSE-30 index shed 325.73 points to close at 14,049.56 points level.
The market remained dull as total ready market volume stood at 161.120 million shares as compared to 193.294 million shares, and the futures market volume declined to 54.928 million shares against 78.440 million shares traded a day earlier.
The overall market capitalisation declined by Rs 50 billion to Rs 3.052 trillion.
Trading took place in 356 scrips out of which 212 scrips closed in negative column and 105 scrips closed in positive column while the value of 39 scrips remained unchanged.
BoP was the overall market volume leader with 19.812 million shares, closing Rs 3.05 lower at Rs 121.70. It was followed by OGDC, which lost Rs 3 to Rs 119.25. Bank Al Falah and NBP decreased by Rs 1.70 and Rs 6.50 to close at Rs 51.70 and Rs 269.00 respectively.
Kot Addu Power, JOV & Co and Callmate Tellips closed in green with the respective gains of Rs 0.75, Rs 0.70 and Rs 0.30 to close at Rs 55.25, Rs 84.20 and Rs 48.95 respectively. Fauji Fertiliser lost Rs 1.00 to close at Rs 30.95, D. G. Khan Cement lost Rs 0.70 to close at Rs 80.65 while Hub Power lost Rs 1.05 to close at Rs 31.55.
Nestle Pakistan and Bata (Pak) were the highest gainers with Rs 65.00 and Rs 7.00 to close at Rs 1460.00 and Rs 152.00 respectively.
Wyeth Pak and Treet Corp were the highest losers which Rs 19.00 and Rs 10.90 to close at Rs 1880.00 and Rs 220.00 respectively.
CFS value decreased by 1.86 percent to Rs 49.98 billion as compared to Tuesday''s Rs 50.93 billion, with five highest CFS scrips being NBP, OGDC, PPL, POL and BoP.
Ahsan Mehanti, CEO of Shehzad Chamdia Securities, said that the main reasons of decline were Client Level Netting starting from March 5, 2007 affecting brokers'' exposures; SECP asking trading transaction/UIN wise data of brokers from Jan 1 to July 31; SECP chairman to meet to the Standing Committee of National Assembly regarding March 2005 crises investigations on five large brokers on March 7, 2007; SCRA balances fell near to $508 million from its highest level of $535 million this fiscal year; year-end results/payouts less than expectations mainly in banking sector; proposals for reduction of cement prices between cement manufacturers fixing it to Rs 240 per bag; over-leveraging in the market; CFS value Rs 50 billion; and international markets down on foreign funds selling/Iran uranium enrichment conflict.
Hasnain Asghar Ali at Aziz Fidahusein Securities said that uncertainty news regarding Client Level Netting, that led to a recovery on Tuesday, failed to avoid an extended bearish spell on Wednesday as the officials confirmed implementation on the scheduled date.
Although the changing geo-political environment and downward adjustment in regional bourses was being blamed for Wednesday''s decline the fact, however, suggests different reasons. The calculated decline suggests that foreign interest in local bourses was not that high as was being publicised as if it would have been high local bourses were unlikely to avoid major slump as is being witnessed in the regional bourses due to foreign selling.
The stocks inflow is therefore likely to continue from the CFS and by local players who usually join the bandwagon when turnover starts picking up. Although healthy earnings and handsome payouts inspired renewed buying in oil and gas exploration and certain banking stocks that disallowed major adjustment selling from the trading portfolios might continue for a while.
The announcement of an informal meeting between the KSE management and the members mainly to address the concerns of the members did allow the market a recovery around midday. Day-end, however, increased the negative numbers. Technically, the index will continue to find support around 10,970-10,977 while overhead resistance stays at 11,350-11,357.
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