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NDFC sells Rs 1.6 bn shares

RECORDER REPORT

KARACHI: The National Development Finance Corporation (NDFC) has sold the shares worth Rs 1.3 billion to Rs 1.6 billion which triggered selling pressure at the stock market from the brokerage houses and some of the retail investors.

The traders and dealers on the Karachi Stock Exchange disclosed divergent views. A few asserted that NDFC has poised to change their portfolio and waiting for right moment to sell their less liquid shares.

According to the traders they have sold shares of A.A Textile, NDLC, Sapphire Fibres, Gulistan Spinning, Mehran Sugar, Cherat Cement, Maqbool Textile, Babri Cotton, Pilcorp, Dhan Fibre, KESC, FFC Jordan and Nishat Mills (there is a possibility that some of the companies might be included or left out).

The traders said NDFC sold the shares of textile and sugar companies because since last couple of years the prices were at low ebb. The recent bull-run improved their price levels, hence the institution unloaded their portfolio. They said that most of the shares belonged to sponsors, which created panic among other retail investors.

They said that NDFC after selling the shares of these companies might improve its financial health and would re-adjust its portfolio. It is expected that the institution might inject Rs 1.6 billion in some other equities. However, a few analysts said that it was not the right time to sell their holdings and the government discourages this activity.

The market is consolidating above 1,800 levels and in search of new benchmark. The selling from NDFC or any other institution in such bulk quantity would dampen the sentiment of the investors, which after a very long time has entered the stock market.

The government has taken a number of steps to re-build the confidence of the local as well as foreign investors. They pledge to revive the economy and want to retire their foreign debts through sale of state-run companies and intend to resolve the rift with the private power producers over dispute of high tariff.

The market did not receded on a larger scale because of liquidity available with the banks and the leading brokerage houses. The real estate prices are depressed, foreign currency trading has lost charm, the government has reduced rate of returns on national saving schemes and gold prices are stagnant which gave the investors of the stock market a lucrative opportunity to earn quick money. But selling from the financial institutions would destabilise the confidence of general investors, a local shareholder said.