Small investors and margin hunters suffered huge losses at the Islamabad Stock Exchange (ISE) and panic-like situation prevailed during last week while ISE Network index nosed-dived as bears tightened their stranglehold. ISE Network index lost 1814.31 points moving downward from 14,521.43 points to 12,707.12 points during the week. The overall turnover ranged between 138,500 shares and 409,100 shares reflecting thin turnover through the negative rally. Total 140 companies participated in trading activity.
ISE Chairman Abdul Waheed Jan told Business Recorder on Sunday that SECP was making serious efforts to protect the investment of small investors through reforms and risk management measures. In this regard, the investors could approach the complaint cell of SECP for the purpose of investigation.
ISE members said that the investors suffered huge losses in just four days. The investors wanted to sell their shares but there was no buyer. This scared everyone at the youngest bourse of the country. A number of small investors entered the market to book profits but they suffered losses due to lack of knowledge, wrong timing and inexperience. They admitted that ISE has witnessed the worst crisis.
In Islamabad the situation became tense on the last working day when hundreds of retail investors of Islamabad and Rawalpindi held a demonstration in front of the building of Islamabad Stock Exchange (ISE) against heavy losses in the shares business. They gathered at the ISE premises to protest against the ongoing crash-like situation at the bourses of the country. They came out of the premises in the morning when ISE Network index nose-dived.
Investors handed over their demands in writing to ISE management, which have been forwarded to SECP and other concerned government departments for necessary action, ISE officials said.
On the same day, Chairman, Securities and Exchange Commission of Pakistan (SECP), Dr Tariq Hasan, said that there was no systemic risk in the present situation. SECP foresaw no problem in the settlement and trading in normal shares continued because they represented fair value. The bargain hunters sitting on the sidelines were likely to lose out.
He said that the situation had arisen because of the "irrational exuberance" which has gripped the market during last several weeks. "At the outset, let me state that SECP regulates the market, but it has no control over irrational behaviour of the market participants. SECP is responsible for maintaining transparency and integrity of trade transactions, but not concerned with the outcome of the trade", he said.
Analysts said that ISE index during the week saw a sharp decline in share prices owing to the selling pressure in OGDC. Other blue-chip scrips were also not able to sustain their values owing to the mounting selling pressure. They opined that OGDC had been the major trigger for decline.
OGDC was trading at its historic high price of Rs 197.85. The decline in its share price led the investors to offload their holdings. Analysts pointed out that March futures contracts also hampered index recovery owing to huge exposures and settlement issues of March contracts.
They predicted that the market would carry on its downward trend next week. OGDC would continue to exert pressure on the index. It is advised that the investors should keep their exposure within their limit and trade only on a strict stop loss basis. However, individual stock valuations are becoming attractive. Top picks for next week are Hubco, FFC, and SNGPL.
However, opinions were divided over the future direction of the market. Some said that the market had already passed through the needed correction, while others said that sustainable level could be 7,000 mark from where it might bounce back.
While individual stock prices came down to a level where they have become attractive, analysts believed that it would not be able to interest the investors. Their confidence, specifically of smaller investors, has been severely dented by the continuous decline the in stock prices. However, they said that investors were themselves to blame for taking over-stretched positions and taking the risk of playing the momentum game.
On Monday, ISE network index showed a decrease of 509.99 points from 14,521.43 to 14,011.44 points. The overall turnover amounted to 409,100 shares as compared to previous volume of 35,67,900 shares. Volumes remained low and market showed negative signs due to crisis in Balochistan and political uncertainty in Sindh.
On Tuesday, ISE network index was down by 448.23 points from 14,011.44 to 13,563.21 points. The overall turnover amounted to 143,500 shares as compared to previous volume of 409,100 shares.
On Thursday, ISE network index showed a decrease of 475.64 points from 13,563.21 to 13,087.57 points. The overall turnover amounted to 138,500 shares as compared to previous volume of 143,500 shares. Trading resumed amid a terrible confusion and panic in the corridors as members who failed to clear their outstanding positions on the forward counter in March settlement turned violent, seeking official help in getting out of the current impasse owing to steep decline in share values. Market capital also suffered a fresh decline reflecting further pruning in the leading energy shares. Some leading brokerage houses had crossed their exposure limits and the market's snap reversal did not allow them to clear their positions. All sectors suffered further erosion under the lead of leading base shares in the energy sector and overvalued shares as the panic was not defused by the end of session.
On Friday, ISE network index showed a decrease of 380.45 points from 13,087.57 to 12,707.12 points. Overall turnover amounted to 47,700 shares as compared to previous volume of 138,500 shares. Major sectors remained under pressure whereas panic-selling again overshadowed institutional buying owing to clearing problems of outstanding positions in forward March contracts by some of the brokerage houses. Bears again targeted the leading base shares.
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