The stock market treaded a downhill path losing 8.14 percent following more than one negative factors, notably lowering of Pakistan's rating by two international rating agencies as well as central bank's decision to increase interest rate during the outgoing week.
The start of the week under review was disappointing as the market opened with a bearish note in reaction to international rating agency S&P's move to downgrade Pakistan's rating from B+ to B, which triggered pressure and equities dipped. In subsequent sessions, the market failed to make any headway and remained in grip of political rumours.
Later, Moody's, another rating agency, followed the S&P course and downgraded Pakistan's rating which further aggravated the situation in the market. The market suffered yet another blow when the SBP announced to tighten its monitory policy and increased the interest rate, which led to crash of the market on the weekend, brokers said.
At end of the week under review, the LSE-25 Index, with a net loss of 359.14 points (8.14 percent) retreated to 4,049.91 from 4,262.85 points. Trade turnover declined to 8.621 million shares from 11.984 million, decreasing by 3.363 million shares (39 percent). The business community and the market people equally came hard at the SBP's move and termed it devastating for the economic growth.
Share prices plunged on first day of the week as selling pressure gripped the market, forcing it to shed 2.25 percent. The LSE-25 Index lost 99.61 points to 4,309.44 from 4,409.05 points whereas volume amounted to 11.081 million compared with 11.984 million shares. Equities moved both ways on the second day, but finally ended on a positive note gaining marginally. The LSE-25 Index reached 4,318.44 points from 4,309.44, improving by 9 points.
The share market edged higher following late session buying in key petroleum and refineries scrips which outperformed on Wednesday, pushing the index 1.21 percent up. The LSE-25 Index, with a net increment of 52.33 points, ended at 4,370.77 compared with previous day's 4,318.44 points. Daily average turnover lowered to 13.260 million from 15.430 million shares, registering a decline of 2.170 million shares.
The market resumed trading with its overnight positive trend, but failed to settle down subsequently because of lack of interest from the investors. The market movement was erratic throughout the day, but buying in oil exploration, distribution sectors and refineries led the proceedings with PPL and PSO showing a remarkable performance.
Equities failed to sustain its overnight surge and plunged on increase in interest rate and Moody's move to downgrade Pakistan's rating, bringing the market down by over 100 points on second last day of the week. The LSE-25 Index fell to 4,262.85 points from 4,370.77, declining by 107.92 points. Daily average volume descended to 12.874 million shares from 13.260 million shares. The market portrayed a dark picture with across the board falls.
Market behaviour was highly unpredictable and initial buying interest in the oil sector deceived investors. On the basis of buying in oil shares, they expected good trading ahead, but the broader market behaved quite otherwise. At the close, declining stocks overtook the advancing ones while Mansha Group shares, including MCB Bank and Adamjee Insurance, topped losers.
The share market crashed on last trading day of the week on a number of negative factors, including raise in interest rate by the central bank, political uncertainty as well as Senator Ishaq Dar's statement about the state of economy. The LSE-25 Index fell by 212.94 points to 4,049.91 from 4,262.85 points.
Turnover further declined to 8.621 million shares from 12.874 million, registering a net decline of 4.253 million shares. PSO underwent massive selling pressure while following lack of interest volume also declined alarmingly.
Analysts said they feared more declines in the upcoming week since all news reports were not supportive to the market. The impact of SBP decision about monitory policy and other negative factors could be seen in the coming week and the market could show weakness, experts said. Brokers are very much concerned about the statement given by Ishaq Dar about state of economy and his remarks about the brokers' contribution to the national exchequer have sent shock waves in the market, an analyst said.
According to him, at present, when political situation is volatile and changing with every passing moment, people should play very carefully and avoid taking long positions. How the PML-N leadership and lawyers representatives react to the constitutional package announced by PPP Co-Chairperson Asif Zardari at a news conference on Saturday will also have an impact over the market sentiment, he viewed.