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KSE index sheds 56.12 points

RECORDER REPORT

KARACHI: Bears dominated the proceedings on Karachi Stock Exchange on Wednesday and share prices recorded drastic declines under the lead of pivotals, breaking the 1900 barrier owing to overbought position and increase in defence budget of India by 28 percent for its next fiscal year.

Faiz Jalal, of BMA Capital Management, said that the news of 28 percent increase in the Indian defence budget unnerved many investors who chose to exit from the market at this stage. A major implication of the Indian move was that it might lead to another arms race between the two countries at the expense of economic plans.

He added that the build-up of arms would in turn contribute to increasing incidents of cross-border clashes and worsening of the already sour relations between the two countries.

The market was expected to experience further correction in the absence of any positive development and the index might breach the resistance level of 1850 within the week, he said. The brokerage house advised its customers to be cautious at these levels and profits should be realised.

The KSE-100 index fell by 56.12 points, or 2.91 percent, to 1874.49 from 1930.61 points of Tuesday. The volume amounted to 316.244 million shares, against 242.203 million shares of Tuesday. Market capitalisation moved down to Rs 480.048 billion from Rs 493.421 billion.

Faisal Abbas, of AHR Securities said that the bearish spell continued at the Exchange where the index fell sharply in the initial stage and remained in the minus zone throughout.

He said that the current bearish sentiment was the result of technical correction that started when the market touched the 2050 mark. Selling pressure by upcountry punters was the main reason behind downward trend, where the bulls were in a panicky situation and they also started to off-load on the available prices, which eventually resulted in sharp decline in the index.

In addition, a news item regarding Wapda official saying that whosoever was found involved in amending the power purchase agreement with the Hubco would be punished according to law, was also one of the major reasons for decline, where selling pressure in Hubco resulted in an overall bearish sentiment.

The market from the start was in the minus territory and bears did not allow the bulls to take control of the proceedings. Though the results of the corporate sector were encouraging, the current trend forced the genuine buyers to leave the field. "The investors were scary and, in panic, off-loaded their holdings as they feared more clashes to be reported near the line of control", a trader said.

However, some optimists believed that the market might suffer a correction of another 40 to 50 points and then it would start an upward journey. Much would depend upon the Hubco and Wapda talks in the coming session which would be a deciding factor behind the consolidation in the market.

PTCL on a trading of 199.373 million shares showed a decline of 60 paisa to Rs 30.50; Hub Power moved up to Rs 26.60 from Rs 27.60 as nearly 32.489 million shares changed hands; PSO on a turnover of 20.889 million shares closed at Rs 240, lower by Rs 5.50, ICI on a volume of 18.048 million shares closed at Rs 13.85, lower by five paisa; and Sui Northern Gas on a business of 7.642 million shares moved down by Rs 1.25 to Rs 21.05.