Bears dominated on the Lahore Stock Exchange on Tuesday where equities suffered significantly across the board amid spiralling transaction volume following foreign funds' selling with local investors remaining on the sidelines.
The LSE-25 index fell by 166.98 points to close at 4225.64 against 4392.62 of Monday while trading turnover increased to 22.930 million shares as compared to 18.009 million shares traded a day earlier.
Only MyBank and Gharibwal Cement witnessed marginal gains while all blue chips including Pak Oilfields, PSO, PPL, Attock Refinery, MCB Bank, Arif Habib Securities, Javed Omer Vohra and Co, National Bank, Engro Chemical and Adamjee Insurance remained under pressure and, after booking substantial losses, closed in the negative zone.
The market opened on a depressed note but after showing a slight improvement for a short while, it started moving down and remained in red zone throughout the day. Merrill Lynch is learnt to have offloaded its position in India following worldwide declines in the stocks because of credit crunch fears. After India, Merrill Lynch seems to be getting out of the Pakistani bourses, panicking the brokerage houses, said Abbasi and Company Chief Operating Officer Syed Muhammad Ishaq Abbasi.
He said the French Bank had frozen three funds, investing in United States submarine mortgage while these funds have also invested in Pakistan worth US $30 million. Because of selling by these funds, the market failed to recover its position while the local investors and institutions kept themselves away from the buying course, he added.
He termed it a trickledown impact of world stocks on the country's bourses and said the special convertible rupee accounts (SCRAs) witnessed fall of 70 million dollars in July and 86 million dollars during August. According to a conservative estimate, 10-15 million dollars must have gone out of SCRAs just in the last couple of days, reflecting foreign funds selling, forcing the local investors to offload their positions, too.
Apart from foreign selling, two/three leading brokerage houses in Karachi are learnt to have been trapped in a few shares also preferring to sell to secure their positions.
He said the Asian Development Bank had linked its financial assistance for capital market restructuring suggesting levy on the shares' turnover was also one of the factors that kept the market in the red zone. The current uncertainty on the political scenario also stopped the investors from getting interested in fresh position, resulting in dull trading. "The investors must adopt the policy of buying on dip and sell on strength to secure their positions," he added. Out of total 116 active issues, only two scrips showed gain, 67 went down while 47 stayed glued to their previous levels.
Among gainers, MyBank and Gharibwal Cement improved by Rs 0.60 and Rs 0.40, whereas in the minus column Adamjee Insurance lost Rs 13.90, Pak Oil Field declined by Rs 12.75, PSO depreciated by Rs 11.10, Engro Chemical and PPL were down by Rs 10.00 and Rs 8.45, respectively. Bosicor Pakistan was the market leader whose 3.366 million shares changed hands followed by Arif Habib Securities with 3.215 million shares.
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