World Bank’s refusal to give aid: Karachi stock market remains unchanged as rating cut

KARACHI: Dull activities prevailed at the Karachi stock market as the index, for the second consecutive trading session Tuesday, remained unchanged in the wake of investors’ concern over World Bank’s objection over payment of $300m to rescue Pakistan and Pakistan bonds ratings downgrade by Moody’s from B3 to B2, analysts said.

The Karachi Stock Exchange (KSE) 100-share index remained unchanged at 9,182.88 points. The KSE 30 index and KMI 30 index also remained unchanged at 10,003.99 points and 11,224.18 points respectively.

The market turnover gained 61.44 percent and traded 0.402 million shares as compared to 0.249 million shares traded in the previous session. The overall market capitalisation fell 0.03 percent as it traded Rs 2.829 as compared to Rs 2.830 of the previous session. Out of 21 companies, one closed in the positive zone, four in negative while 16 remained unchanged.

Husnein Asghar Ali, Analyst at Aziz Fida Husein and Company said steps taken by SBP to ensure smooth financing against shares and permitting the banks to invest up to 30 percent of their equity in shares (delay in decision might not allow an immediate impact) will certainly be beneficial; the benefit is likely to be felt on unfreezing of the local bourses.

Besides the development on liquidity issue, the healthy third and first quarter results of the main board stocks being announced will play their part in tempting fresh funds once the hangover settles down and the ’market becomes a market again’, it is therefore recommended to start weighing the stocks having huge growth potential, as depicted in the upcoming results despite all the economic and political constraints. Thus, to stay well prepared for entering the arena once the trading resumes and the stocks will be available at extreme discounts. Ahsan Mehanti, Analyst at Shahzad Chamdia Securities said dull activity continued due to rising economic uncertainty and IMF conditionality to raise interest rates by 3.5 percent to hurt investors’ confidence in days to come.

Trust Modarba was the volume leader in the share market with .283 million shares as it closed at Rs 1.35 after opening at Rs 1.35 with no change in its value. 1st Fid Leasing SPOT traded 0.50 million shares as it closed at Rs 4.10 after opening at Rs 4.20 shedding 10 paisas. Sitara Energy traded 0.29 million shares as it closed at Rs 18.11 after opening at Rs 18.25 losing 14 paisas. Gharibwala traded 0.8 million shares as it closed at Rs 17.20 after opening at Rs 17.98 losing 78 paisas.

The futures turnover was at 1.00 million shares. staff report