KARACHI: The falling economy and political uncertainty affected trading sentiments at the Karachi bourse where market slumped to year’s highest decline in a single week ending May 09, 2008.

The leading benchmark 100-Index posted fell 728 points or almost five per cent this week and closed at its 12-week lowest level of 14,229 points.

“This (i.e. 728 points) is the highest decline in a single week during the last couple of years. Such intensity of crash was earlier recorded in March-2006 crisis after March 2005,” analysts said according to records available.

This was the third consecutive bears-run week at the local bourse, cumulatively shedding 1,448 points or 9.2 per cent from 15,676 points all time high was registered on April 18, 2008.

On weekly basis, therefore, the parallel running junior 30-Index fell by 1,243 points or almost seven per cent and closed at 16,768 points.

Farhan Mahmood at JS Research said depleting foreign exchange reserves and rising international oil prices heightened concerns over the deteriorating macroeconomic situation.

Moreover, sharp depreciation of rupee against dollar amid capital flight abroad unnerved investors. This situation reached its peak on Friday when rupee fell to 69.90 against the dollar in the inter-bank market. However, timely SBP intervention helped ease pressures on the rupee, which closed at 68.60. Further, there were also rumours that the government might increase discount rates soon to shelve excess money supply.

Pre-budget uncertainties such as capital gain taxes also affected investors’ confidence most, he added.

During this week, the Foreign Portfolio Investors (FPIs) withdrew another Rs3.3 billion from the local equity markets. They (FPIs) remained heavily busy in the shares market, as they were found buying and selling stocks in accordance with the fast changing market sentiments. Under the review period, they invested Rs4.5 billion and disinvested Rs7.8 billion.

The near to end deadline of deposed judges’ reinstatement i.e. May 12, 2008, - that was extended following the previous deadline of restoring them ended - was playing a role of a handing sword on investors heads, said Ahsan Mehanti at Shahzad Chamdia Securities.

Any positive or negative outcome of this judges’ issue would certainly play its role in the market and would determine the future course of action at the bourses, he added.

Investors concerned over the likely imposition of Capital Gain Tax (CGT) in the upcoming budget also depressed the investment sentiments in the equity markets, another analyst added.

The market remained highly volatile through out the week, posting its intra week high of 15,201 points on Monday and intra week low of 14,039 points on Friday.

During the outgoing week, heavy selling was observed in sectors like insurance (down by 14.1 per cent), commercial banks (down by 6.6 per cent), cements (down by 6.4 per cent). However, Independent Power Producers (IPPs) being good defensive stocks were up by 1.2 per cent on week-on-week basis, reported JS Research.

The average ready market turnover also dropped to 13-week lowest level of 188.6 million shares. This is also 17 per cent lower than the average turnover of last week recorded at 227.8 million shares.

In accordance with the overall dismal performance of the market, the overall market capitalisation declined by over Rs220 billion or almost five per cent to stand at Rs4.365 trillion this weekend.

During the week, CFS investment stood at Rs52.5 billion, down by 3.6 per cent on weekly basis. Similarly, CFS rate also registered a decline as it stood at 11.6 per cent versus 12.1 per cent previous week.

Weekly Movement in Blue Chips

Symbols Open on Close on Difference

Monday (Rs.) Friday (Rs.) (Rs.)

BoP 58 54.49 -3.51

DGKC 107.47 92.79 -14.68

ENGRO 331.8 320 -11.8

FFBL 39 39 0

HBL 259.99 249.5 -10.49

LUCK 138.85 126.51 -12.34

MCB 421.88 355 -66.88

NBP 222.5 216.75 -5.75

OGDCL 132.5 130.4 -2.1

POL 414.2 415.5 1.3

PPL 269 259.45 -9.55

PSO 502 507 5

PTCL 45.45 44.66 -0.79