Index plunges 7pc as investors sell heavily

KARACHI —The KSE 100-share index last week virtually crashed from its all-time peak level of 14,202.00 points and took a massive plunge on panic selling originating from some big ones triggered by reports of series of attacks on the security forces, killing dozens of active members of the forces.

By Our Correspondent

Published: Mon 23 Jul 2007, 8:44 AM

Last updated: Sat 4 Apr 2015, 10:21 PM

The snap weekend rally has, however, raised hopes that the panic selling may be halted when the trading resumes next week as is evident from the strong weekend rebound.

The KSE 100-share index with a massive fall of well over 850.44 points or seven per cent at 13,351.79 points as compared to previous 14,202.00, eroding market capital by Rs284.00 billion. Its Junior part 30-share index also crashed from its recent highs at 16,074.00,off 1,088.00 points.

The route of the bulls was total as no one among the leading including institutional traders ventured to cover positions at the sharply lower levels.

It was not a single factor but a combination of them, which did not allow investors, notably foreign ones to take breather and all saw the market collapse helplessly from the sidelines. Even rescue operations from the financial institutions was no where in sight.

The price decline was also unprecedented. Never in the history of the KSE blue chips, such as PSO, Mationl Bank, MCB, Shell Pakistan, Adamjee Insurance, Pak-Suzuki Motors, Dawood Hercules and many others fell like house of cards on panic selling but no willing buyers.

However, the two successive market crashes of 394 and 466 points on Wednesday and Thursday were not the largest single session fall. It has declined by 547.93 point or 5.88 per cent on June 14,2006 on rumours of default of a member, 491.02 point or 4.43 per cent on March 8, 2006 and 468.20 points or 4.10 per cent on March 6,2005 on President Bush's visit to Pakistan but no deal.

"Investors have been holding on to their positions during the post-Lal Masjid army operation trading sessions on the hopes that the market may absorb the shock as was reflected by Tuesday's rebound", said a leading stock analyst Faisal A.Abbas "but the series of attacks on the security forces, claiming lives of dozens of personnel that followed unnerved them".

He said if the law and order situation further deteriorates in the coming sessions, some of the valiant bulls may also gave in and could join the bandwagon led by the bears.

The selling was broad-based and covered the entire list, with overvalued shares being in the hit list, most of which fell like the house of cards.

"The talk of emergency later denied by the president accelerated the pace of selling as some of the foreign investors joined the race of sellers", analyst Ashraf Zakaria said. Another analyst Ahsan Mehanti said it was not the single negative factor but a series of them, which may further destabilise the market, which loaths to work in the similar conditions linked to law and order. However, all was not bad with a broader market as some of the leading shares whose floating stock on the open market short did rise under the lead of Fazal Textile,Wyeth Pakistan, Unilever Pakistan and some others managed to finish higher.

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