Selling pressure witnessed, index sheds 269 points (01082008)

LEADER REPORT
KARACHI: Bearish sentiment surrounded the market again after a day's relief. The issues of concern were the lack of confidence about the leadership, deteriorating macro economic indicators, in which the major factors is the depreciation of rupee, the flight of foreign capital and expanding fiscal deficit for which the government has been borrowing money. The law and order situation in the Northern Areas has continuously been hitting the investors' confidence and specially the foreign investors as a result they are availing every opportunity to exit the market.
The evident factor of Thursday's selling pressure and bearish sentiment were the decisions taken by the Economic Coordination Committee (ECC) to freeze the margins of Oil Marketing Companies (OMC) and decrease the deem duty of refineries to 7.5 percent from 10 percent. The impact on OMC's will not bring any reduction in their profits, while incase of international oil prices above USD 100 per barrel will deprive them from excessive profits. The impact on refineries will decrease the earnings by 12 percent to 15 percent.
Market opened on a positive note as expected, while the positive movement could not prolong and selling pressure brought a decline in the index and at the maintaining the bearish activity index closed down by 269 points at 10,584 points. Moderate volumes were witnessed compared with the present trend, upto 115 million shares.
The Rupee maintained the slow depreciating stance, as Rupee closed after a slight depreciation against USD in Inter-Bank and Open Market at 71.48 and 72.25 respectively. The net selling in foreign investor portfolio investment in the last session was of USD 8 million.
The fundamental outlook of the market seems to be encouraging, while the political situation, economic imbalances and law and order situation in the Northern Areas brings the fear of any extreme action which is hurting the investors' confidence are the major disturbing factors. Investors are advised to be highly cautious, both the direction are open for the market, it depends on the situation in the Northern Areas, borders of the country and how the government handles the issue.