Staff ReportWednesday, January 16, 2013 - Karachi—The Karachi equity market crashed and shed over 500 points on Tuesday when the Supreme Court ordered the arrest of Prime Minister Raja Pervez Ashraf convicting him in the rental power corruption case.
The court’s verdict rattled the investors confidence who were already cautious about Tehreeki Minhajul Quran chief Dr Tahirul Qadri’s long march which is going on in Islamabad demanding electoral reforms and immediate dissolution of the elected assemblies.
According to Ashen Mehanti, a director at Arif Habib Securities, the stocks nosedived amid panic selling after the court directed the authorities to arrest the premier.
Tuesday witnessed the KSE 100-share index plunging by 525.29 points or 3.16 percent to 16,107.89 points compared to Monday’s 16,633.18 points.
“Pakistani stock market crashed after (the) court order of arrest of Prime Minister in rental power case,” remarked Mohammad Sohail, a senior analyst and chief executive officer of Topline Securities.
A historical perspective reveals that Tuesday’s slump of more than 500 points was the fourth in the history of KSE with the market having witnessed the in May 2008.
“This fall of more than 500 points has occurred for the 4th time in the history of Karachi Stock Exchange,” recalled Sohail.
Last time, the equity analyst said, such a major fall of over 500 points was observed in May 2008 when the Pakistani equities had fallen on account of the adverse impact of global financial crises.
Before tumbling to the intraday low of 16,049.06 points the index hit the intraday high of 16,633.18 points on the day.
According to Sohail, the investors, who were already cautious due to the ongoing long march in Islamabad, got panicked and aggressively sold their positions after the Supreme Court issued its verdict.
The volume set in the green zone as the trading turnover at the ready-counter was recorded skyrocketing to 239.425 million shares as against 87.944 million of the previous day. “Volumes remained high due to extreme volatility,” said the Topline executive.
Mehanti, however, observed a bearish activity in the trading session in stocks across the board as, he said, the investors were awaiting the outcome of Dr Qadri’s long march called for a powerful caretaker setup ahead of general election.
“Weak global stocks and commodities and concerns for rising circular debt in Pakistan energy sector played a catalyst role in bearish activity at KSE despite strong earnings outlook,” said the analyst.
The KSE 30 index also lost more than 385 points to stand at 13,196.76 points against 13,582.35 points a day earlier. Of the 365 scrips traded on Tuesday, only 15 gained, 336 lost, and 14 remained unchanged.
Fauji Cement was the day’s volume leader by having counted 43 million of its total shares traded with per share rate opening at Rs 7.04 and closing at Rs 6.66.
On the future market, the trading volume increased to 14.214 million shares compared to 3.898 million of Monday.
The analysts believe that political developments in the days to come would set the future course of movement for the country’s stock market. “Going forward developments on the domestic political front would play a key role on the share prices,” said Sohail.