KSE nosedives 615 points on interest rate hike
Saturday, May 24, 2008
KARACHI: Karachi bourse crashed down by massive 4.5 per cent on Friday with more than five dozen stocks closing at their lower locks.
Benchmark KSE 100-share Index nosedived 4.5 per cent or 615 points in a single day-session to close at 13,012 points - the eight-month lowest level.
The free-float market capitalisation based KSE 30-Index tumbled down by 808 points or five per cent to end at 15,275 points.
The day plunge is the result of significant rise in key discount rate to 12 per cent from 10.5 per cent and the State Bank of Pakistan directive that all banks must pay minimum five per cent profits on Saving and PLS Saving products, analysts said.
The worsening situation can be gauged from the evidence that out of total 344 active counters on board, 293 stocks declined in red against mere 34 stocks advanced. Remaining 17 scrips closed unchanged.
The day turnover remained sluggish at 154.7 million shares while overall market capitalisation dropped by another Rs187 billion to stand Rs4.004 trillion.
The day slump is the third biggest historical fall and first of this calendar year in 100-Index. The biggest crash of 696 points was recorded on Dec 31, 2007, following martyrdom of Benazir Bhutto on Dec 27, 2007. The second worst historical fall of 636 points was registered on Nov 06, 2007, following the imposing of emergency in country on Nov 03, 2007, by the then Gen. Musharraf.
Chief brunt of SBPs decisions to curtail the inflation and narrow down the twin deficits (current account and trade) was felt strongly on banking counters, said Khurram Shahzad at InvestCap.
Other leveraging sectors including cement and textile also shared this burden of SBP corrective measures for economy, as they were availing long term financing on floating mark up rates for their business expansions, he added.
The increase in minimum profit rates to five per cent on saving deposits would increase the cost of funds for larger commercial banks. Banks rates of return on these deposits are on a very lower side. Few larger commercial banks are paying only 2-3 per cent return. Therefore, impact would be higher for larger commercial banks, said M. Imran Khan at First Capital Equity.
Besides closing at their lower circuit breakers, National Bank, Habib Bank, MCB Bank and United Bank included their huge share in negative in 100-Index. They respectively contributed 31 points, 32 points, 39 points and 23 points.
Some other second and third tier stocks also closed at or near their lower locks.
Almost all the giant energy, telecom, fertilizer and cement stocks hit lower locks and include significant points in minus in the chief 100-Index.
The biggest contribution of 104 points in negative was received from Oil and Gas Development Company in the index, followed by Pak Petroleum, Pak Oilfields and Pakistan State Oil in double digits.
Pakistan Telecommunication Company, Engro Chemical, Fauji Fertilizer Bin Qasim, DG Khan Cement, Lucky Cement and many more; all closed at the lower restricted levels while most of blue chips shed huge points in total making of indices-points.
The energy stocks have potential to recover market from dark red zone, as international oil prices are hovering at their peak levels and are feared to move further up owing to massive speculations. But psychological sell-off stocks and fears regarding imposing of Capital Gains Tax in capital markets the market would take long to recover the losing confidence, analysts added.
Highest volumes were witnessed in TRG Pakistan at 12.2 million closing at Rs6.31 with a loss of 99 paisa, followed by Hub Power at 12 million closing at Rs30.65 with a gain of Rs1.54, OGDC at 9.8 million closing at Rs126.35 with a loss of Rs6.65, PTCL at 7.6 million closing at Rs41.24 with a loss of Rs2.17 and PPL at 6.8 million closing at Rs253.65 with a loss of Rs13.35.
KSE nosedives 615 points on interest rate hike
