The share market received heavy battering on Friday over State Bank''s stance to tighten monetary policy and government''s decision to allow three-year-old vehicles import resulting in selling pressure in auto sector shares.
The KSE-100 index lost 57.06 points, or 0.8 percent, to 7353.85. The index made a low of 7294.12 points while intra-day high was at 7434.35. The major losers of the session were Fauji Fertiliser Bin Qasim, OGDC, DG Khan Cement, PTCL, National Bank of Pakistan and MCB, while small resistance came from Bank of Alfalah and Pakistan State Oil Ltd.
The market took off with a slow start but soon was on downhill course on concerns that disclosure of futures contract would disturb the brokers'' community. The Securities and Exchange Commission of Pakistan (SECP) notice requiring dissemination of broker-wise open interest position of top 15 stockbrokers for each futures contract on daily basis at KSE website put immense pressure on the minds of investors.
Another factors which jolted the share prices trend was the central bank''s statement that it would maintain a tight monetary policy in the six months ending December 31, 2005, because of high inflationary pressure owing to world crude oil prices, floods and higher interest rates internationally.
This statement, according to market men, was most harmful as several of them believed that there was room for more interest rate hike in the coming days.
The government''s decision in the trade policy for this fiscal year, relaxing conditions for import of old and used cars by overseas Pakistanis under transfer of residence scheme baggage rules and gift scheme also had adverse effect on the market. "It would result in increase of inflow of used cars into the country and investors'' concern that this would erode the sales of listed auto companies," a leading dealer said. Shares of Indus Motor, Pak Suzuki and Honda Atlas dropped substantially.
Traders, dealers and analysts were anxiously waiting for the outcome of the committee formed by the Advisor to PM on Finance and Economic Affairs a week back. Several presentations were made to improve the liquidity.
The ''Shaukat Tarin'' committee would present its findings on Saturday on badla financing, switching to margin financing or find other means of ways to improve the liquidity. According to the report, nearly Rs 30 billion is required to boost the liquidity of the stock market. Its outcome would decide the course of the market next week.
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