The local share market crashed on Monday and fell by 4.09-percent on news of SECP move to extend the CFS review date to July-end, coupled with the reported threats by oil marketing companies to withdraw their one-billion dollar investment from Pakistan.
The LSE-25 index retreated to 5058.53 points from 5274.28 of the preceding session, registering an abnormal loss of 215.75 points or 4.09-percent. Volume further lowered to 38.568 million shares from previous 45.192 million shares, showing a decline of 6.623 million shares or 14.65-percent.
The market opened with a depressed note and later started falling sharply on the news of CFS review extension. The SECP has extended the date for review of the Continuous Finance System (CFS) from May 31 to July 31, 2006. During the extended period the current cap will continue.
Earlier, people were expecting a bullish trend on Monday on hope of increase in value of CFS, but the SECP move overshadowed their anticipation. Equities fell like ninepins but the volume was very low which shows lack of interest from the institutional side, analysts said. Oil sector led the market falls while Prime Commercial Bank and some other low-profiled shares improved their worth, but with very low margins.
Although, the market has been showing a dull picture for the last few weeks and today's fall seems a continuation of that trend, but the negative news of CFS review extension date and oil marketing companies threat to withdraw their investment are said to be the key factors for the day's abnormal battering, Mirza Muhammad Irfan, equity research head of Capital Vision Securities Ltd, said.
Foreign oil marketing companies have reportedly threatened to withdraw $1 billion investment from Pakistan if the NAB did not stop investigation against them. Such news had direct impact on the oil sector, which fell drastically under the lead of Pakistan Oilfields. Earlier the government had also stopped NAB investigations against sugar millers.
According to him, because of Monday's heavy falls, the market might attract fresh buying at low levels in the upcoming sessions, otherwise, there seemed no other factor to provide immediate support to the market, Irfan pointed out.
According to another analyst, the belated impact of the news appearing in the press a few days ago that Morgan Stanley had lowered the weightage of companies in its indices was also seen on the market on Monday as earlier big players, due to their own interest, had not let the market on such ground. Now they have withdrawn their support, he added.
Moreover, some other world market also fell on Monday, he said, adding Indian market declined by 4-percent, Dubai 7-percent, Sri-Lanka 2-percent and KSE 3.5-percent. According to him, the Saudi market has also lost its worth by 40-percent in just three months.
Out of a total of 104 scrips, 3 fell, 50 declined while 51 stayed glued to their previous levels. Among major gainers, Prime Commercial Bank gained Rs 0.70, PICIC Energy Fund Rs 0.15. Pakistan Oilfields and PSO suffered loss of Rs 19.150 and Rs 16.15, respectively. OGDC and National Bank led the market by volume with 6.308 million shares.