The share prices declined without any negative development after a volley of gains during the morning session on Thursday. Several analysts and traders termed it as doomsday for the stock market and cautioned their investors to stay on the sidelines till such time that erratic behaviour ends.
The decline of 315 points on Thursday was the largest since May 23, 2005, when the index plunged by 316 points. The biggest decline was witnessed on March 17, 2005, when share price nose-dived and index lost 441 points.
During March 17 to May 23 on different sessions, the index registered a decline of as much as 400 points, but afterwards, the market recorded a study increase on higher corporate earnings, privatisation, rise in badla rates and selective foreign buying. since August 1 to October 19, the index gained 23 percent.
The KSE-100 index after being 108 points up initially suffered a major collapse and plunged 422 points intra-day. Overall the index declined 315 points to the 8558-point level.
Tanvir Abid, head of research at Live Securities, said the highly overvalued banking sector led the decline, as BoP, MCB and NBP all closed limit down. The significant quantum of leverage in the futures market aggravated the decline.
Sentiment was marred on the sharp decline in Hubco's quarterly earnings. The scrip was amongst the first to fall to its lower circuit. Prominent among losers of Thursday's market were OGDCL, PTCL, POL, PSO, PPL and DG Khan Cement.
Bears were in total command as decliners outpaced advancers by a margin of 2.4 to 1. Even the cement sector was not spared even though significant hype has been created regarding potential rebuilding activities in the quake-hit areas. Investors' sentiment was also subdued as PTCL's handover to Etisalat remains a question mark. Adverse developments on the country's economic front, particularly with respect to the mounting trade deficit are causes of serious concern.
Tanvir Abid said that sentiments in the market are extremely bleak, adding: "In our opinion banks have still a lot of room to go down. With the October futures contract ending next week, the squaring of positions by investors is likely to put the market under additional pressure."
Abbas Raza, research analyst at First Capital Equities, said that all core scrips were parked on their lower locks as KSE-100 index came under heavy selling pressure.
The bourse opened with a positive note under the umbrella of OGDC, POL, DGKC, LUCK, UBL, PSO, PTC, MCB and NBP that whisked the index to the intra-day high of 8981. Benchmark-100 at strength gave participants the chance to sell the market, thus all blue chip securities were hammered to their lower circuits.
The market, from previous sessions, has been under the grip of fierce volatility and on Thursday with a wavering of 442 points the contestants had the worst day after the march debacle, and it won't be incorrect to say that most of them were unable to square off or sell their positions. KSE-100 is now ripe with instability and insecurity, which could create further pressure in the market, therefore, sidelines for the time being would an excellent strategy, he suggested.
Irshad-ul-Haq Khan from Elixir Securities, said that bargain hunters and investors tried to save the day, but failed to do so. With the market moving so turbulently, participants once again got trapped and fell victim to the volatility.
A barrage of selling pressure was witnessed in the final half hour of the trading day, which surly shattered the confidence of participants for the second time this week. PTC, OGDC, NML, BOP and NBP closed limit down at their respective circuit breakers. The market is expected to remain volatile and one should trade cautiously with stop losses.
Aammar Ali, research analyst at Abamco Management Ltd, said that the Abamco-30 index lost a whopping 257.41 points (-3.93 percent) to close at 6,299.33 as against 6,556.75 on Wednesday. The KSE-100 Index also declined by a devastating 314.96 points (-3.55 percent) to close at 8,558.00 as against 8,872.96 on Wednesday.
The Abamco-30 underperformed the KSE-100 index as a number of scrips in the 30-share index hit their lower circuit-breakers. Wednesday's index leaders, PTC, MCB and POL were again in the limelight - only this time, they led the index deep into the negatives! The three scrips along with PPL contributed -107 points to the Abamco-30, explaining 42 percent of the index movement.
At KSE-100's front, OGDC alone contributed 105 points to the index, while PTC and PPL followed with -51 and -29 points respectively. The three scrips together explained 59 percent of the movement. Volumes rose in the panicked market, perhaps, as investors ran to offload their positions.