Equities have failed to sustain last Wednesday's upsurge and plunged on the increase in interest rate and Moody's move to downgrade Pakistan's bond rating, bringing the market 2.46 percent down on Thursday. The LSE-25 Index fell to 4,262.85 points from past day's 4,370.77, registering a net decline of 107.92 points.
Daily average volume descended to 12.874 million shares from 13.260 million shares. The market depicted a dismal state of affairs with across the board declines. Analysts said the behaviour of the market was highly unpredictable and investors were hoodwinked by buying interest in the oil sector shares. As a matter of fact, the big players played a game by generating interest in oil sector shares, which lured investors, they claimed.
On the basis of buying in oil shares, investors expected good trading but the broader market behaved otherwise, they pointed out. At the close, declining stocks overtook the advancing ones. Mansha Group shares, including MCB Bank and Adamjee Insurance were the key victims of pressure.
Amer Hussain Khan of the Invest and Finance Securities Limited said the impact of Moody's move of lowering Pakistan's sovereign rating was expected, but in his view the increase in the rate of interest was the most damaging factor. "I think 1.5 percent raise in interest rate is above expectations and big players were already aware of this happening", he added.
He said making excuse of this news, the big players initially supported the oil sector to deceive people and then offloaded heavily in the broader market. The game is still in the hands of big players, he said, adding on Thursday, they sold massively and were expected to buy again at attractive levels, he said.
"I foresee a disappointing outlook of the market ahead and in view of the said developments don't expect any recovery in the upcoming sessions," he said. Rumours about capital gains tax are also a disturbing factor and if the exemption is withdrawn in the budget, it will further hit the market. Levying capital gain tax or upward revision in capital value tax will discourage investors and volume will further dry up, Amer Hussain viewed.
Out of total 109 active issues, only three could improve their worth, 63 landed in negative column, while 43 were unchanged. Among major gainers, First Capital Equities was down Rs 4.00, OGDC 70 paisa, and Pakistan Premier Fund 5 paisa. In red zone, MCB Bank declined Rs 17.80, Adamjee Insurance Rs 15.95, and PSO Rs 15.00. Arif Habib Securities and Bank Alfalah were the volume leaders with 1.520 million shares and 1.449 million shares, respectively.
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