Rumours about President Musharraf's "resignation" and some brokers' inability to address margin calls on Wednesday led to cause aggressive selling on Karachi Stock Exchange where KSE-100 index witnessed a heavy decline of 567.27 points, closing at 12,254.98 points level from Tuesday's 12,822.25 points.
The KSE-30 index lost 749.35 points and settled at 14,395.11 points level. The market witnessed some buying in the initial hours and the index did make a visit to the positive territory to hit 12,926.26 points intra-day high level, up by 104 points. However, it could not continue this positive trend due to panic selling, which pushed the index into negative zone to reach 12,231.53 points intra-day low level, down by 590.72 points.
Trading remained thin and the ready market volume declined to 187.807 million shares as compared to 263.767 million shares traded a day earlier. The futures market turnover decreased to 56.187 million shares against 83.882 million shares of Tuesday.
The overall market capitalisation declined by Rs 170 billion to Rs 3.783 trillion. Trading took place in 359 scrips, out of which 292 scrips closed in negative and only 56 scrips closed positive while the value of 11 scrips remained unchanged. NIB Bank was the overall volume leader of the day with 10.021 million shares however lost Rs 1.00 to close at Rs 12.00. Bank Al Falah and NBP declined by Rs 2.37 and Rs 8.48 to close at Rs 45.13 and Rs 161.27 respectively.
TRG Pakistan decreased by Rs 0.80 to close at Rs 6.65. OGDC lost Rs 6.48 to close at Rs 123.27. Fauji Fertiliser Bin Qasim declined by Rs 1.70 to close at Rs 32.43. Arif Habib Sec closed at Rs 156.28, down by Rs 8.22. Pak Reinsurance lost Rs 4.52 to close at Rs 85.92. Bosicor Pakistan decreased by Rs 0.93 to close at Rs 13.05. Fauji Cement declined by Rs 0.99 to close at Rs 10.20.
Hinopak Motor and Al Ghazi Tractor were the highest gainers and gained Rs 8.00 and Rs 7.51 to close at Rs 548.00 and Rs 255.00 respectively while AKD Capital Limited and Nestle Pakistan were the highest losers and lost Rs 53.34 and Rs 50.00 to close at Rs 1013.65 to close at Rs 1350.00 respectively.
Hasnain Asghar Ali at Aziz Fidahusein Securities said that the value buying did emerge initially and the index made a visit to the positive territory. However, the recent statements by US senators admitting some mistakes certainly gave birth to rumours about President Musharraf's resignation.
Such rumours certainly invited aggressive selling. Intensity increased following rumours that inability of some brokers to address to the margin calls either by their brokers or bankers led to forced selling by the respective financers.
The hefty selling forced the buyers to pull back their buying limits. Absence of buyers in no time forced massive erosion. Liquidity crunch forced the leverage players to stay on sidelines and at on time, from there, almost all main board stocks hit the bottom lock.
With the government's stance still unclear on capital gain tax adding to the misery were the conflicting statements on the issues hardly related to the economic and social health of the citizens. This left the participants with no option but to wait. Low local confidence was shattered after the rupee left its ground and the reserves started depleting.
But even after all these hue and cry the authorities still have other issues on priority. "Technically, although index continues to stay in an oversold region, we desperately need something quite concrete to trigger short covering in order to allow index to stage a come back and determine a bottom", he added.
Reuters add: Shares fell nearly 4.5 percent to close at a nine-month low on Wednesday as investors nervous about the political and economic outlook sold their holdings, dealers said. The KSE-index has lost 13 percent since the beginning of the year and is 22 percent lower than a life high set on April 21.