Investors see fresh bout of profit-selling

The KSE 100-share index did not show signs of weakness early in the week followed by reports of foreign selling on the oil and banking counters but the mid-week witnessed the return of bulls allowing it to finish with clipped losses.

Opinions are divided over the future direction of the market but leading analysts think there may not be any big shock before the index hit its newly set target of 15,000 level.

But some others say there could be some terrible setback in the current overvalued market in the form of fresh bout of profit-selling and much would depend whether or not bulls make fresh commitments at the declining prices.

“Apart from an expected apex court ruling on the president's eligibility to be presidential candidate for the next term,what worries investors more fresh state of political uncertainty linked to election woes”, said a leading broker.

But he ruled out the possibility of a major shakeout at this stage as foreign investors are back in the ring after having taken profits in a highly overbought market. The recent speculative run-up on the Karachi Stock Exchange yesterday was halted as investors took profits at the highly inflated levels in a highly overbought market amid a briskly traded session but there were buyers at each dip.

The KSE 100-share index earlier in the week reacted by 337.57 points or by 2.5 per cent at 14,449.98 as compared to 14,787.55 at the last weekend eroding Rs115 billion from the market capital at Rs4,398 billion as all the leading base shares attracted selling at the higher levels. The free-float 30-share KSE index on the other hand suffered a bigger fall of 611.32 points at 17,383.97 points on identical grounds.

Leading oil and cement shares,notably OGDC, Pakistan Oilfields, D.G.Khan Cement,and Lucky Cement were among the prominent losers,which have larger weightage in the index. Later in the week they managed to finished with modest losses.

“It was a long overdue technical correction in a highly overbought market”,a leading analysts Ashraf Zakaria said “It could go for further pruning in the coming sessions as some leading bears are out to cash in on the available margin of profits”. But some others said it was the belated reaction to the city carnage, which in turn added to the prevailing uncertainty.