The share market plunged on Monday as the Securities and Exchange Commission of Pakistan (SECP) extended the date for 'continuous funding system' (CFS) and there were rumours that Benazir Bhutto and Nawaz Sharif would arrive in Pakistan this week.
The SECP in late night decision on Sunday said that CFS limit, which the investors were believing that the cap would be removed, has been extended for two more months, to expire on July 31. It said that discussions were underway and following the approval of all stakeholders, the limit would be removed.
Moreover, the other factor which hurt the sentiment of market men was the agreement signed between two former prime ministers in London. There was strong rumour that soon both would arrive in Pakistan. This resulted in selling pressure, because seasoned investors believed that their arrival would create upheaval in the political set-up.
The KSE-100 index plummeted by 414 points, or 3.6 percent, to close at the 11097-point level. This was attributed to combined effect of no change announced in CFS ceiling, budget related uncertainties and unfavourable newspaper reports regarding oil companies and the banking sector.
The intensity of the wreckage could be gauged from the fact that none of the actively traded scrips was in the green. In fact, almost all the notable scrips closed near or at their lower circuit levels, except OGDCL. OGDCL and MCB posted relatively lower battering at 2.9 percent and 4.1 percent to close at Rs 152.60 and Rs 239.75, respectively. NBP and POL closed near their lower locks at Rs 258.50 and Rs 420.30 respectively. On the other hand, PPL, DG Khan Cement, PTCL, FFBL, SSGC, Fauji Cement, BoP, Lucky Cement, DSFL, KESC and NML all closed at their lower circuit levels.
Adamjee Insurance, Bank Alfalah, Faysal Bank and UBL also closed limit down with relatively low volumes. In the broader market, losers outnumbered gainers by a margin of almost 11 to 2. Trading volume was also thin at 293 million shares, 3.4 percent lower compared to 303 million shares on last Friday. The market outlook was bearish. "Amidst limited institutional support, we suggest a cautious stance."
Rabia Hussain from Jahangir Siddiqui Capital Markets, said that the market opened on a negative note and stayed negative throughout the day. The news related to Continuous Funding System of 25 billion rupees cap extension was taken negatively by investors. Activity was witnessed in a few scrips like OGDCL, POL and NBP. However, the market closed on a negative note when intra-day traders squared their positions.
An analyst from Atlas Capital Markets said that the market commenced on a negative note amidst news of CFS review being extended for another month, coupled with the implementation of the Unique Identification Number (UIN) from August. It was felt that the market would stabilise between the 11200-11250 level by the end of the day, but further pressure came during the last hour, wiping off another 100-150 points. Selling was witnessed across the board, with OGDCL being responsible for bulk of the loss contributing, 78 points to the total decline and was also the volume leader, recording a turnover of 36 million shares.
The volume during the day fell further to 198 million shares as against 211 millio shares traded on Friday. On the whole, trading was seen in 384 companies, out of which prices of 55 appreciated, those of 306 declined and 23 remained unchanged.
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