THE shares at the Karachi stock market plunged by 373 points or 2.6 per cent over the week to close at 13,858 points on Friday.

The activity remained on lower side as well, with daily average volume down by 45 per cent to 144 million shares compared to 261 million shares witnessed the previous week. Daily traded value also declined by 46 per cent to $65 million compared to $120 million last week.

The equity market of the country was taking the full brunt of the blow of global equity meltdown on rising concerns over the Euro zone debt crisis. “It naturally has a spillover effect on the emerging markets, causing big rout in neighbouring markets including India and China, where investors were scrambling to take the cover of low risk assets and out of stocks,” said an analyst.

The fall in KSE was also fuelled by the fear of flight of foreign investors, who were net sellers of $6.01 million worth equity during the week compared to net buyers of $3.32 million the previous week.

Bank Islami Pakistan (BIPL) was the lead gainer during the week, showing price increase of 55 per cent. Pak Suzuki Motor Co. was another big gainer by 6.6 per cent. Among declining scrips, Lotte PakPTA lost 10.6 per cent; Engro Corporation was down 8.6 per cent and EFood dipped 7.2 per cent.

Volume leaders during the outgoing week were Pak Telecom, D.G. Khan Cement and EFoods. Among the large cap sectors, cement stocks saw the biggest fall in market capitalisation by 4.6 per cent and volume by 44.4 per cent.

It was followed by chemicals, Oil and gas, paper and board.

Hasan Raza, analyst at the InvestCapital, said that the market had remained lackluster during the week with shaky investor confidence as developments on Pak-US relations in line with resumption of NATO supplies stood under the spot light. Meanwhile, approval by the Cabinet Committee for issuance of Rs82 billion Term Finance Certificates to bridge circular debt was prudently welcomed by market participants.

On global front, Morgan Stanley Composite Index (MSCI) restricted the Pakistan status, decreasing its representation to 4.4 per cent from 4.7 per cent. On corporate side, auto sector performance stood stellar as sales grew by 14 per cent to 143,374 units during ten months of current fiscal year.

On economic side, external account picture looked quite depressing as the Current Account deficit reached $3.3 billion during ten-months of 2012 compared to surplus of $466 million last year and the Foreign Direct Investment (FDI) also dragged down by 48 per cent to $667 million in ten-months 2012, from same time last year.

AKD research team stated that even as US-Pakistan relations depicted an up tick, the local bourse could not shake off the general downtrend in global equity markets where the Euro zone continued to be gripped in political/macroeconomic uncertainty and even US growth appeared to slow down. Commodity-linked stocks were hit particularly hard on the back of bearish commodity markets as well.

Naveed Tehsin, analyst at JS Global, stated that investors opted for a cautious stance before the Federal Budget which was expected to be presented on June 1, 2012.

The finance minister has already stated that there would be no increase in the tax rate and the theme would be to broaden the tax base rather than putting burden on the existing tax payers.

The improving US-Pak ties amid talks of reopening route for NATO supplies and invitation to the President to attend NATO summit were unable to impact the market positively, analyst argued.

Futures counter: The market’s open interest position was up by Rs33 million or 1.18 per cent to stand at Rs2.84 billion. However on the other side, futures volumes declined by 27.7 per cent over the previous week to average 15.5 million shares. Moreover, futures spreads jumped to 13.29 per cent, up 243 basis points over previous week. The top-5 scrips on the futures counter holding 58 per cent of the total open interest were Engro, D. G. K Cement, PSO, NBP and Lucky Cement. —Dilawar Hussain