Share prices on Karachi Stock Exchange plunged after a number of companies announced earnings lower than expectations of the investors, and institutions sold their portfolios resulting in massive erosion on first day of the new week.
The KSE-100 index nose-dived and registered a loss of 112.23 points, or 2.31 percent, to 4756.59 as compared with 4868.82 of Friday. The volume amounted to 235 million shares as against 272 million shares. The market capitalisation moved down to Rs 1.230 trillion from Rs 1.262 trillion.
Due to lack of support from financial institutions the index hurtled down. The main factor behind this bears' onslaught was the Pakistan Oilfields financial result. The company did not announce dividend for the six months ended on December 31, 2003, against market expectation of 60 percent interim dividend, while its earnings also dropped as compared to same period of previous year.
Sui Southern Gas earnings figures also made an impact as its net income showed small upward movement and amounted to Rs 608 million against investors' expectation of Rs 638 million.
Tariq Hussain Khan, manager research at Live Securities, said that the market opened on a slight positive note but went down straightaway on account of overbought position and negative sentiment regarding fresh operations against al Qaeda network. On the other hand, uncertainty over the internal political front also depressed the sentiment. Later, on aggressive selling by weak holders dragged down the market into negative column.
The market took a healthy correction and went down drastically on account of continued selling pressure by small investors in the wake of avoiding margin calls.
Aadil Ehtesham of Multiline Securities said that bearish onslaught prompted panic amid knee-jerk selling as the market stayed under pressure with oil and gas, telecom, fertiliser, banking and cement being all noticeably weak. PTCL, Hubco, PSO, Engro, OGDC and KESC spent much of the session chopping around in negative territory while stocks like SSGC, SNGP, ICI and Dewan Salman closed on negative note.
Monday's action understandably reflected some nervousness about how the market would react to the upcoming earnings reports. Underlying valuation concerns moved the market into more conservative position. The market is slipping and further breakdown is possible. "We do not expect any major shift in these conditions in near term, and continue to advocate a cautious, patient approach."
PIAC showed a decline of 40 paisa to Rs 24.40 on a volume of 29.702 million shares; OGDC moved down to Rs 48.95 from Rs 51.15 on business of 23.377 million shares; PTCL fell by 65 paisa to Rs 39 on total deals of 19.526 million shares; Pakistan Oilfields slipped to Rs 201.50 from Rs 212.10 on turnover of 16.293 million shares; and Dewan Salman suffered a loss of Rs 1.25 to Rs 24.65 as around 15.318 million shares changed hands.
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