THE Karachi Stock Exchange 100-share index last week appeared to be heading toward its all-time record low after the sell-off in blue chips spilled over to all other counters, but investors remained conspicuous by their absence despite an attractive bait of capital gains.

The perception that the market could rebound from the current lows after oath taking of President Obama and announcement of new policy initiative did not come true. A change at the top in the US is always considered a positive development for local corporate sector, but linking future US aid to stability on Afghanistan borders by him, worried investors as it could well prove a double-edged weapon in the years to come. Hence there was no positive reaction in the stock market.

The index finally finished the week after having breached the psychological barrier of 5,000 points at 4,929.55, off by another 582.38 points or 9/19 per cent and so did its junior partner at 4,545.05 points, lower by 812.48 points or 12 per cent.

The fresh erosion from the market capital of another Rs166 billion together with previous Rs200 billion, signals that the loss is massive and could take years to fully recoup.

In this developing scenario, both on the financial and economic fronts, the future outlook for share business appears to be terribly bearish as negative news far outweighs the positive ones.

“There is no question of fresh buying irrespective of lure of capital gains”, brokers said adding “finding of exit routes are now more important than to indulge in fresh buying”.

“Already groaning under the weight of unsettled positions on the CFS counter, the main reason behind the persistent foreign and local selling, and a daily galore of lower circuit-breakers, the recovery may remain a bit remote,” they added.

What seem to have taken the leftover steam if any out of the market, are reports that the banks had started to sell shares pledged by brokers against their credit lines to cover their margins. And added to it were political tensions caused by conflicting threatening statements by Indian political leaders and the local situation on the law and order front.

The breach of fresh resistant level is imminent, analysts said but opinions are divided about the future low. Some said it could be around 4,000, while some others believe the level to fall to 3,000 points.

The proverbial fight between the bulls and the bears may now have no relevance to the prevailing market situation as the latter is totally vanquished and may take years to claim its right place in the market parlance.

The current plight of the market and massive losses suffered by brokerage houses and individuals during the protracted bearish spell in Leo Tolstoy’s words could be described as follows:

“Happy families (bulls) are happy all alike but the unhappy ones (bears) are unhappy in their own way”, quoted a leading analyst.

“No one could dispute the fact that objective conditions both on the corporate and political fronts are not ideals for stock trading, but what is more disturbing is the fact that even jobbers, who keep the wheels moving in such situations, are also conspicuous by their absence,” he added.

“The disturbing fact is the failure of the market bailout fund, which could not help lure general investor back in the market after an initial psychological boost,” some others said.

“Most leading analysts are now tight-lipped about the future direction of the market and loath to say the current levels are attractive enough to make fresh investment and speculative buying, they added.

“No one can precisely predict at this stage where it will end and when the consolidations forces will be at work,” they added.

The market decline was again led by banking, insurance, oil and food shares, which fell sharply in unison on active selling in the absence of demand from any quarter.

Forward counter: There was no change on the cleared list as leading shares maintained their downward drive on selling in the absence of buying support from any quarter. But revival of speculative support on some of the leading shares in the oil and banking shares has raised hopes of some improvement during the next week.

Leading shares, mainly MCB, PSO, National Bank, Pakistan Oilfields, Adamjee Insurance, EFU Life and general insurance were among the leading losers but without any transaction at the falling prices.—Muhammad Aslam