THE KSE 100-share index was massively battered throughout last week on panic selling after hike in interest rate by 1.5 per cent to 12 per cent amidst renewed fears about political confrontation between the contenders of power on some core issues.

Analysts said investors read between the lines in the Asif Zardari’s interview to an Indian channel attacking the president and seeking his exit.

On Friday the market crashed for the second consecutive session from the recent highs by 615.26 points, the second largest single-session fall, the all-time highest 696.25 hit on Dec 27, 2007 after the assassination of Benazir Bhutto.

It suffered a massive fall of 1,231.15 points over the week at 13,011.74, wiping out Rs370 billion from the market capital at Rs4,004 billion. Its junior partners suffered bigger decline of 1,608 points at 15,274.59 points.

It was a terribly disturbing week for the investors as negative news followed in quick succession never allowing them to plan for a long-term investment.

The margin calls on some of the investors as they exceeded their borrowing limits well above their deposits followed by panic selling by them to adjust their margins to avert a possible fall, which took away about 2.5 per cent from the share values or Rs104 billion in a single session followed by successive lower locks in most of the blue chips.

And then followed the 1.5 per cent increase in discount rate by the central bank to 12 per cent, which seemed to have proved a last straw on the camel’s back at least for the near-term, analysts said.

The crash of the index below the jealously guarded resistance level of 14,000 points at 13,400.54 signals the prevailing political uncertainty would further intensify in the coming weeks if the power elite did not respond quickly to changing scenario.

However, it was not a single week largest decline as it had suffered by well over 1,000 points in identical uncertain conditions including last June’s market collapse.

“The share market seemed to be trapped somewhere between the vested interests of leading political bulls”, said a leading analyst Ashraf Zakria. “Until supreme national interests take precedence over power struggle to defend the erring ones it may well be no-win situation for the contenders”, he added.

Public response to their last year’s protest processions is still fresh in the minds of investors and most of them tried to get out of the market in panic leaving behind a long list of causalities including lower locks in some of the leading scrip, analyst Hasnain Asghar Ail said.

Leading index based shares fell like nine pins under the lead of Arif Habib Securities, National Bank MCB, Engro Chemical and some others but without finding many willing buyers even at the falling prices, he said.

What worries investors is the fact that foreign investors may not return to the market even at lower levels as what they need is the return of political stability, another analyst Ahsan Mehanti thinks.

The bears have taken the market into their tight grip in the absence of support from financial institutions, and have scared everyone including the genuine investors.

However, some others said sans political depressants, the market had not many negatives despite lowered Pakistan currency rating and the weak rupee and had the potential to rise with the same speed it was falling now.

Forward counter: Speculative issues on the forward counter also followed the lead of their counterparts in the ready section and fell like nine pins on panic selling but there were not many buyers at the falling prices.

All leading shares, including MCB, Pakistan Oilfields, Pakistan Petroleum, National Bank, Engro Chemical, Arif Habib Securities, OGDC and some others were leading among losers.—Muhammad Aslam.