Tough-talk by the US regarding direct action against terrorist networks along with severe melt down in international and regional equity markets led to a negative opening at the Karachi Stock Exchange. The local bourse on massive low volume price erosion led by frontline and expensive stocks forced the benchmark to undergo an adjustment of almost two per cent during intra-day trade.
The KSE 100 index closed at 11606.86 levels with the loss of 83.37 points, while KSE 30 index lost 102.64 points to close at 11096.16 levels. All Share index closed at 8050.84 levels after losing 56.76 points.
Unveiling of official plan suggesting resolution of ballooned up circular debt on Sept 24, 2011, disregarding US threats as mere pressure tactics, various participants from corporate and retail circuits came in for aggressive accumulation, thereby inviting decent consolidation on dips in almost all the front line stocks. Although benchmark kept floating in the red territory through out the session due to unprecedented selling from off-shore channels in singled out stocks, tough resistance was given to the bears.
With the nod of caution intact upon resolution of lingering circular debt, the stocks hard hit due to cash squeeze will certainly witness improvement in stocks valuations; the sectors may include banking, Oil & Gas exploration and marketing, and power producers, wherein some are already benefiting from a weaker local currency. Although the impact on the economy will be much higher, the decline in oil prices will neutralise the impact of declining oil prices for the companies pegged with US dollar.
Hasnain Asghar Ali at Aziz Fidahusein said ‘incase the planned execution of circular debt resolution fails to materialize the negative internal and external events will re-surface to push the local bourse for ugly sessions in the roll-over period next week.’
