The Karachi share market witnessed dull trading activities during the outgoing week ended November 8, 2008 with the lowest ever volume on Friday due to no concrete development on the IMF funding and Saudi oil facility so far, along with no news on the lifting of the price floor.
The benchmark KSE-100 index inched up by 0.26 points to close at 9,183.14 points level. The market witnessed lowest ever volume of 78,500 on Friday. However, the average daily volume improved by 41 percent on weekly basis to 0.328 million shares as compared to previous week's average of 0.232 million shares.
No trading activity was seen at the futures market counter throughout the week. Market capitalisation increased slightly by Rs 60 million to Rs 2829.636 billion. The market started on a positive note on Monday and the KSE-100 index closed in green at 9,183.14 points level, up by 0.26 points. However, this trend could not with the availability of IMF bailout package for Pakistan, as also funds from the 'Friends of Pakistan'.
"If the KSE gets signal from the government regarding availability of Rs 20 billion market support fund (MSF) and Rs 30 billion government guarantee for put-option for foreign investors, the exchange would hold a special session on Saturday to sell out shares on 15 percent discounts, before removal of floor", sources said, and added that the KSE was expected to remove the floor on November 17.
Sources said that there were good chances for release of the fund anytime during the week, most likely on Friday, as all work has been completed in this regard. A two-hour special session will be held on Saturday--when normal trading is closed--in which shares will be offered to investors on discounts to provide them exit before removal of the floor.
"The special session will help reducing pressure on the share market on its opening as majority of 'hurry investors' would be given a chance to sell out their shares before removal of the price floor", a KSE member said.
The floor mechanism was imposed on the share prices on August 27, 2008 closing level of 9,144 points to avoid further losses in the continuous declining trend of the market, as the benchmark KSE-100 index was declined by 42 percent from its all time high level of 15,676.34 recorded on April 18, 2008.
However, after imposition of price floor, trading activities had been reduced at the share market. The trading volume reached the lowest ever level of 78,500 shares on November 7, 2008, while no trading activity has been seen at the futures counter during last four weeks continue and the index remained unchanged on remaining days of the week till Friday due to investors' lack of interest.
Atif Zafar, an analyst at JS Global Capital, said that with no concrete developments on the IMF funding and Saudi oil facility, coupled with no news on the lifting of the price floor, market mood remained negative in the ready as well as in the off-market.
At the off-market counter average daily volume was 5.3 million shares against 8.9 million shares in the previous week, depicting a decline of 41 percent. Investors were seeking more than 20 percent discount amid uncertainty over lifting of the price floor and lack of positive news from the international donors.
There was no breakthrough on international funding as the recent visit of Advisor to the Prime Minister on Finance Shaukat Tarin to UAE for liquidity support from UAE's central bank ahead of Friends of Pakistan meeting signalled that desired funding commitment was not received from Saudi Arabia. Moreover, there were no major developments on the IMF funding front, though it was expected that Pakistan would formally request for funding during Shaukat Tarin's scheduled meeting, as reported, with IMF on November 10.
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