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Stocks receive massive battering

The presidential re-election by the existing assemblies apart, the market took a major plunge of about three per cent and a single session fall of 385.01 points in the KSE 100-share index on Thursday followed by media speculation about the imposition of emergency.

The net fall in the index was 751.20 points at 13,012.96, which eroded Rs226 billion at Rs3,814 billion.

The official denial about the media reports about emergency came a bit late when the panic selling had already wiped out Rs115 billion from the savings of small investors and signalled the exit of foreign investors, said a leading stock analyst.

However, the denial could again put the market back on the rails possibly by the next week but it will take quite sometime to recover the massive fall in the market capital. Although opinions are divided over the future direction of the market in the backdrop of developing situation on the law and order and political fronts.

The safest assumption appears to be is that the market will maintain its erratic stance in the coming weeks as both local and foreign investors will not like to go beyond their predetermined positions and will refrain to build up new portfolios.

However, what worried analysts is the perception of foreign investors about the future share business outlook and whether or not they shared the concerns of the locals about the rigid positions taken by the contenders of power.

"What will happen to the stock market if they decided to exit after taking away about $1 billion tied to their portfolios in the share business," said a worried broker.

Bank, oil and other overvalued shares received massive battering after a section of foreign investors indulged in panic selling, notably MCB, National Bank, OGDCL, Hub-Power and Lucky Cement.

A leading analyst Faisal A. Abbas said the market is largely weighed down by some of the highly sensitive external factors as was reflected by falling volume figures and sanity may return to the market until some of the immediate irritants are not removed.

The other negative factor, which hastened the market decline was fresh threats from the US to hit targets in Pakistan to wipe out Al Qaeda safe havens in the tribal areas, some others said.

"Massive battering received by the market trend setters, National Bank and MCB, notably on the forward counter reflects that the long-term investment scenario is not that encouraging," another analyst Ahsan Mehanti said.