KARACHI – The estranged relationship of Pakistan and US has further deteriorated with the US administration suspending all official visits for the next couple of weeks, along with a threat to block aid over the fracas ensuing over the Raymond Davis case. The fresh development does not bode well with indecisive investors already nervous.
With sentiment being soured by rising uncertainty on market affairs, the KSE-100 index witnessed correction for another day. The benchmark index lost another 62 points to close at 12,299 levels. The KSE 100 index closed at 12,299.28 with the loss of 61.66 points while total volume stood at 44,499,783 along with a total value of 2,327,125,929.
Volumes continued to shrink and only 72 million shares traded hands, as foreigners have started shifting funds to developed markets from emerging markets. On the other hand, PSO’s result announcement was better than anticipated with an EPS of Rs 41.5 and dividend payout of 50 percent. A rebound in earnings was primarily due to tax reversal following the government’s decision to revert back to 0.5 percent turnover tax from one percent.
Low volume sell-off after initial positive activity led by declining values in main board stocks, while saturation point and prolonged stagnation have seemingly exhausted investors, particularly those exposed in high priced stocks. Absence of buyers and the gloomy horizon on almost all sensitive fronts left the market men with no viable options other than to sell at available market levels.
Accumulation in dividend yielding stocks along with concerns over textile exporting, coupled with short covering along with low volume price influx in expensive stocks did restrict the index, while despite substantial volume contribution by low priced and mid-tier stocks turnover stayed on lower side.
With persistent reservations over the launching and regulations of the long awaited leverage, the investors looked least interested in reacting on rumors regarding the launching date of the product. Dividend yielding stocks and various mid-tier, low priced stocks however continued to invite cautious accumulation, while low volume strength continued to prevent the benchmark from reflecting the wider sentiment.
A decline in activity of foreign participants, local financial groups and holding companies have rendered the outlook for high priced stocks a tough task for market men, thereby maintaining the chances for further adjustment in high priced stocks.
Hasnain Asghar Ali at Aziz Fida Husein said that the resolution of diplomatic tensions with the US and the government’s efforts of reducing non-developmental expenditure may encourage activity at the local bourse, while approval and launching of flexible leverage product is likely to infuse fresh turnover, he opined.
