The Karachi Stock Exchange-100 Index fell by 942 points in intraday trading on Monday due to the alleged rumors of continuous political uncertainty after notices were served on big fishes of the market in corruption cases.
The people lost around Rs 206.1 billion in a day in the stock market over the rumors that big brokerage houses were involved in the terrorists financing and that the law enforcement agencies have served notices for their potential arrests.
The market was opened at 33,891 points in the morning and closed at 32,944 points after declining 2.79 per cent with market capitalization of Rs 7.342 trillion but closed at Rs 7.137 trillion.
Umair Naseer, analyst at Topline brokerage house, said: “There were rumors in the stock markets that owners of big brokerage houses like Arif Habib Securities, AKD Securities and others were served notices by the law enforcement agencies, but later it could not be confirmed.”
He said some TV channels aired tickers contradicting the rumor that Arif Habib securities that his company was involved in any criminal financing or he was served any notice by the law enforcement agencies.
During last the 15 days, the law enforcement agencies including Rangers have arrested big names like Dr Asim, owner of ZiauddinHospital, and close friend of Asif Ali Zardari, and were also remanded into the custody of Pakistan Rangers. The analyst said that second reason of the declining share market was major selling in the mutual funds of the brokerage houses.
According to an equity trader working for another Karachi-based brokerage house, individual investors have been selling shares on the KSE after most Asian stock markets experienced a bearish trend on Monday.
“Individual investors are panicking and have trimmed their positions,” he said.
Prices of 332 out of 375 companies have declined while those of 34 stocks have appreciated since morning, KSE data shows. The turnovers of the market remained at 218.4 million shares throughout the day.
However, the investors play in future market remained in profits as 110 stocks gained while only 33 companies share lost their value. The KSE-100 Index shrank by 1.6 percent last week amid reports that the bearish trend in the market was partly because a few brokers had received notices from regulators over non-compliance of client segregation regulations.
Last week, severe volatility was witnessed at the stock market as concerns over international markets and regulatory tightening led to the benchmark KSE-100 index falling by 556 points (1.6%) during the week ended September 4.
The KSE-100 index had a rollercoaster ride, rising and falling sharply within trading sessions as pressure from international markets emanating from the Chinese stock market crisis took its toll on the bourse. Concerns about regulators taking action against capital market participants led to panic selling at the end of the week.