The Karachi share market witnessed selling pressure on Tuesday and the benchmark KSE-100 index lost 117.81 points to close at 5,455.67 points. The market started on a positive note and the index hit 5,597.86 points intra-day high. However, the market could not continue its momentum due to uncertainty among investors and the index fell into negative zone to reach 5.425.61 points intra-day low level.
Trading volumes at the ready counter declined to 129.573 million shares as compared to 174.059 million shares traded a day earlier. The overall market capitalisation declined by Rs 34 billion to Rs 1.721 trillion. Out of the total 293 active scrips, 210 closed in negative, 70 in positive while the value of 13 scrips remained unchanged.
OGDC was the overall volume leader of the day with 11.163 million shares, however, the scrip lost Rs 1.14 to close at Rs 48.91. Jahangir Siddiqui Co declined by Rs 1.78 to close at Rs 33.84 with 8.162 million shares. Arif Habib Sec decreased by Rs 1.07 to close at Rs 22.49 with 6.320 million shares. PTCL closed at Rs 14.14, down by Re. 0.57 with 6.242 million shares.
NIB Bank lost Re. 0.25 to close at Rs 4.92 with 5.772 million shares. NBP declined by Rs 3.09 to close at Rs 60.18 with 4.271 million shares. Nishat Mills (R) decreased by Re. 0.24 to close at Re. 0.11 with 3.813 million shares. Bank Alfalah closed at Rs 12.11, down by Re. 0.99 with 3.763 million shares.
MCB Bank declined by Rs 1.57 to close at Rs 117.76 with 3.751 million shares. Faysal Bank was the only scrip in the top 10 volume leaders that closed in positive at Rs 12.83, up by Re. 0.33 with 3.682 million shares.
Javedan Cement and Shell Pakistan were the top gainers with Rs 4.50 and Rs 4.09 to close at Rs 99.50 and Rs 208.78 respectively while Unilever Pakistan and Pak Services were the worst losers with Rs 31.00 and Rs 10.13 to close at Rs 1930.00 and Rs 193.25, respectively.
Ahsan Mehanti at Shehzad Chamdia Securities said that intense selling was witnessed as uncertainty loomed over the impairment issue under international accounting standards due to be implemented by listed companies in the December based results announcement.
Investors remain concerned over the ongoing meetings between SECP, KSE and SBP officials on the impairment of capital losses issue. Distress selling continues as market entered overbought zone in addition to minimal foreign selling element.
Hasnain Asghar Ali at Aziz Fidahusein Co said that threatened by downpour on strength, the accumulators stayed cautious as the confusion regarding accounting principles prevailed besides various other unclear issues. Strategy did force the sellers to stay on back foot, as desperate selling was likely to lead to price erosion, consequently the downside stayed confined during the first half, some showers however, kept coming that forced the dull market to stay in negative region, cautious accumulation by the local corporate sector did keep the trading activity alive.
The nervousness reflected by swift change in stance by the market players'' ie off loading on every down tick thereby led to an increase in pressure towards the closing hours, the sellers went one-step forward and the index breached yet another psychological 5,500 points. The index closed with a net loss of 2.5 percent.
Absence of active leverage tools, confusion regarding the true valuation and the impact of economic downturn likely to affect the profitability of the listed companies and the upcoming federal budget, has undoubtedly changed the stance and strategies being practised by the participants of the local bourses.
Squeeze in number of initiators have clearly forced the followers and the investors to ignore company fundamentals and rely on the buyers strength for taking fresh bets as the chances of capital erosion still exist till the true financial picture and absolute impact of economic downturn, of even the companies known for having huge cash reserves is unveiled.