NRO, Rate-Move Doubts Dent Karachi Stock Exchange (KSE)

KARACHI: Political turmoil over the National Reconciliation Ordinance (NRO) and uncertainly on reduction in discount rates forced the investors to take an exit from the Karachi Stock Exchange (KSE) at the start of the fresh week as investor participation reduced to near 5-month low.

The benchmark KSE 100-Index declined by 84.40 points or 0.91 per cent to finish at 9,221.96 levels, KSE 30-Index dropped 84.69 points or 0.86 per cent to end at 9,741.21 levels, whereas KSE All Share Index went down by 60.25 points or 0.91 per cent to close at 6,533.68 levels.

Furqan Punjani, analyst at Topline Securities told The Financial Daily here that equity market was evidently dominated by uncertainty over NRO issue which persuaded investors to adopt sell strategy.

He said that investors also remained cautious over monetary policy as less than 100bps cut could further dent investor confidence.The coming long weekend also restricted investors to take fresh positions with overall volumes reduced to almost 5-month low, he added.

Bears were there since the start of the day as market opened 1 point down; red numbers then gradually gained steam as investors, mostly the locals, preferred to offload holdings due to the worrisome political situation in the country over the NRO issue while the uncertainty on reduction in interest rates in the monetary policy due to be announced on November 24, 2009 or Tuesday (today). Therefore selling pressured continued and index at about 1135 PST touched its lowest level of the day of 9,185 points (-ve 120 points). Though market remained in the negative zone but some recovery at the end allowed the index to end with reduced losses above 9,200 levels.

Despite negative activities buying continued by the foreign investors as according to the National Clearing Company of Pakistan Limited (NCCPL) figures, there was a net foreign buying of $0.86 million.

Investor participation saw a major decline as only 76 million shares exchanged hands during the course of the day; 64 million shares less when compared to a turnover of 140 million shares Friday. It is important to mention here that volumes were reduced to almost 5 months low as the KSE had registered a turnover of 42.6 million shares on July 3, 2009. Out of total 372 active issues, 260 declined and 96 advanced while 16 issues remained unchanged.