The overbought situation at Karachi Stock Exchange and new rules pertaining to CFS, running on real time basis, put immense pressure on the players resulting in decline of 1.4 percent on the first session of the new week.
With introduction of the new system of CFS, that has been implemented parallel with the market, coupled with selling pressure in cement sector, the market remained volatile and closed below the 9500-point level.
Consequently, trading volumes also shrank by 45 percent to 299 million shares from 418 million shares of last Friday.
PTCL was the only scrip that gained some momentum due to a meeting between Etisalat and Privatisation Commission to finalise the pending matters regarding PTCL transaction. The telecom giant closed at Rs 64.90, up by Rs 0.50, with a heavy contribution in trading volumes of 32.7 million shares.
OGDC, MCB and NBP were the major cause of drop as they wiped out 53.34 points from the net fall of 135.13 points.
Ali Sibtain from Elixir Securities said that the low volumes indicated that the market was not necessarily in a bearish run yet. Brokers and investors alike were trying to come to terms with the new CFS mechanism where financing coincides with market timings. As a correction, it was not entirely unwelcome. "We have been highlighting certain stocks as our key picks in the market with the caveat that a correction would bring out the inherent value in the key picks," he said.
"PTCL claimed the volume leader spot and was the grace saver for the market. The backdrop of Etisalat's meeting with Privatisation Commission infused strength into the scrip. Many expected a positive outcome from the meeting and such an outcome would pull the market out of its correction. However, for us, the real star was Lucky Cement, resisting all the pressure in the market. Lucky is the one stock, which will ride strong earnings growth within the next two fiscal years, and holds tremendous value even at these rates. The other is National Bank of Pakistan. In our opinion, NBP has been duly corrected and any further downslide should be grabbed as an opportunity to build positions. Our other key picks remain Union Bank, POL, Nishat Mills, ICI and Pak Suzuki."
Abbas Raza, research analyst at First Capital Equities, said that participants' lack of interest could be attributable to new CFS rules applicable from Monday. "Both the market and the CFS run parallel during trading hours and only same day's position is allowed to be rolled over, while a day old repo is not allowed to be carried forward to the following day, rather it would remain unreleased for 30 days with incurring first day's CFS rate or till the buyer doesn't sell, thus creating confusion and bewilderment among contestants."
The bourse, with new rules in line, seems somewhat baffled and the market's closure below 9400 could further skew the stocks because of which caution is advised and trading, if necessary, should be done with strict stop loss and profit margin in mind, he added.
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