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Index crashes from the recent highs on panic selling

KARACHI - The KSE 100-share index yesterday virtually crashed from the recent highs by 317 points or 2.11 per cent on near-panic selling triggered by a massive plunge on the world and regional markets,talk of US rate cut and fears of standoff between the contenders of power.

Analysts said it was not a single negative factor but a combination of them fuelled by an alarming US recession and its likely adverse impact on the world economies and a belated reaction to Bear Streans credit crunch and its sale-off at a lower price, which drove the market below its technical mandate or inherent strength.

The index at one stage was off by a massive 550 points and signalled that there could be a violent end if the rescue operation was not lauched at the declining prices, they said.

However,the midsession short-covering by a leading investors on selected counters allowed it to finish partially recovered from the initial lows at 14,728.54 after having broken about half a dozen consecutive barriers on panic selling in the leading base shares.

What seems to have hastened the market fall was reported US fund selling owing to not encouraging news from their financial systems and the local investors followed them in a big way.

The US investors may not have a major stake in the local bourse as did they in Mumbai stocks but no one could stop psychological sell-off in a falling market, some brokers said.

The panic selling may have political backing for obvious reasons employed on such occasion but that may be a bad idea, they said.

"I was expecting the revival of institutional support at the dips as a rescue operation customary in the similar situations," a leading analyst Ashraf Zakaria said "but there was an intriguing quiet on that front may be because of political compulsions."

Despite oath-taking of the elected members of the new assembly, nomination of speaker and deputy speaker, conflicting news about the prime minister continues to have its toll in the form uncertainty, another analyst Fasnain Asghar Ali said.

Traded volume rose to 241 million shares from the previous 155 million shares but losers held a strong lead over the gainers at 276 to 55, with 55 shares holding on to the last levels.

Lucky Cement topped the list of actives, modestly higher by 45 paisa at Rs135.15 Rn 27 million shares followed by DG Khan Cement, off by Rs2.15 at Rs105.75 on 16 million shares, OGDC, easy by Rs1.10 at Rs132.00 on 12 million shares, Pakistan Oilfields, sharply lower by 6.15 at Rs351.80 also on 12 million shares, Arif Habib Securities, off Rs6.50 at Rs163.50 on 10 million shares, Fauji Fertiliser Bin Qasim, off Rs1.15 at Rs44.50 on 9 million shares and Pakistan Cement, lower 35 paisa at Rs10.65 on 7 million shares.