Low volumes at KSE after violence engulfs city

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The recent wave of violence in the city has added to the economic woes at the KSE. The local bourse witnessed another day of low volume price erosion as the sell-off was unable to invite follow up support due to curtailed local strength. Bears wiped out the recovery posted during the last couple of sessions as the KSE100 shed 141 points to close at 11,128 points. Lack of interest and indecisiveness was further underpinned by deteriorating law and order situation in the city as investor chose to offload holdings.
The KSE 100 index closed at 11,128.52 levels with the loss of 141.43 points, while KSE 30 index lost 151.39 points to close at 10618.82 levels. All Share index closed at 7,735.95 levels after losing 95.43 points. Total 50 scrips advanced 148 declined and 87 remained unchanged out of 285 scrips traded.
Dreary volumes of 42 million shares continued to influence the price discovery mechanism at local bourse. NBP’s earnings for 1HCY11 disappointed investors as the scrip hit the lower circuit breaker. A red cloud blanketed the oil and gas sector as international oil prices remained depressed amidst dull global economic growth.
In the absence of key triggers and foreign investors’ blessing, activity at the local bourse is likely to remains range bound, said Salman Vidhani, Senior Investment Analyst at HMFS.
Front line stocks offering consistent dividend yields and reporting sustainable growth underwent technical adjustment while listed companies were exposed to the threats of power curtailments, high and expensive debt, increasing input cost and declining local and export demand. Restricted dividend paying capacity due to circular debt continued to invite renewed sell-off, thus forcing the benchmark to undergo triple digit decline. However, syndicated efforts succeeded in restricting the benchmark from reaching below 11,100, while below expectation announcement by NBP did intensify the negativity. Asset mismanagement in various public sector companies is likely to lead to further decline in earnings. Circular debt is being blamed for recent rundown on reserves, while higher exploration charges and increase in unsuccessful drilling is likely to lead to downward revision in fair values of various government owned entities.
Hasnain Asghar Ali at Aziz Fidahusein said technical correction in frontline stocks is likely to continue on track of growth, both on earnings and payouts, while it may offer investment opportunities. Low volumes and absence of buyers on intervals, suggest caution, he added.