KARACHI: The Karachi Stock Exchange (KSE) closed on a negative note subject to dull activity on Monday. Lack of concrete positive triggers led to profit-taking as the benchmark KSE-100 Index suffered a loss of 63.13 points to close at 10538.27 levels. Investors’ agility continued to shrink as the results season crossed the finish line.
The benchmark index moved within a band of 138 points, while the index touched a high of 10,667 points and slipped down to 10,538 points. There was an absence of any trigger, which could provide ample energy to investors to re-enter the market with refresh mind and start active participation.
Oil prices on the preset of winter season increased from Monday along with a two percent power tariff hike, while it was expected that the power tariff hike may continue to increase on a monthly basis, which may fuel the already ballooned inflation numbers.
Companies that topped the volume leader’s board provide evidence for the lack of genuine investors’ interest as the volume leaders board was dominated by third-tier stocks like NBP and LOTPTA. Out of the top ten, seven stocks were from the penny stocks counter. The OGDC showed some resistance, while the PPL and the POL moved with the wind.
Largely, top-tier stocks remained in the red zone, while the FABL moved against the wind after the scheme for amalgamation was announced. Analysts were of the view that the market might remain dull and dry in the absence of electrifying news from the economic and corporate front. Volumes dwindled by 23 percent and were recorded at 81 million shares.
The PSAF ended the day with the highest volumes traded, as the book closure for redemption is due to begin on November 4 and investors look to cash the little arbitrage opportunity provided by the scrip. The NBP declined for the second consecutive day by 1.1 percent on the back of a lower-than expected result in the third quarter of 2010.
Prolonged stagnation did invite a colour of panic in the main board stocks as the short-term traders offered their holdings at best available buyers, and the presence of buyers on interval thereby led to low-volume price erosion. The recent increase in petroleum products has been severely criticised and threats of a shut down from the local manufacturing sectors and the impact on inflation along with the rising trend in government borrowing continued to keep the threat of the rising trend in local interest rate on high side.
This kept the leveraged companies highly vulnerable, mainly those facing a tough time in managing debt. Similarly, the absence of updates on leverage product margin trading system kept even the resident participants in a confusing mode. “The settlement of local issues of the KSE and the formation of a committee to address the issue of ready board leverage and various other matters to address
the grievances of the local bourse might, however, allow the local bourse to trade at its potential with improved volumes,” said market analyst Hasnain Asghar Ali, adding that various main board stocks have the potential of trading at improved multiples despite various threats on economic front.
