Index plunges to below 10,500 level after losing 468 points (17072008)

LEADER REPORT
KARACHI: Selling euphoria continued, as the KSE-100 fall more than 4 percent on Wednesday.
The political instability, deteriorating macro economic indicators and poor law and order situation in the country hit the investors confidence. It also inclined foreign investors to quit the market.
The market opened on a bearish note on Wednesday. In the beginning some activity was witnessed but soon almost all actives approached their lower circuit breakers and the index closed down to 10,492 points after shedding 468 points. The depreciation of rupee continues, measures taken by the SBP were successful to stabilise the rupee for short term, but for long term foreign currency inflow is required. The World Bank has approved an urgent aid of $500 million, and in the US congress proposals were given for an aid to Pakistan which will support the country's macro economic indicators.
The volatile oil prices took a downturn by $9 per barrel. The strong fundamentals due to the positive expectation FY08 financial result could not even support the oil sector. While some resistance was shown from the sector in the start, but later on it followed the market trend and majority of the scrips closed hitting their lower circuit breakers. Cement price increased to its all time high level of around Rs. 400 per bag. The hike in cement prices is due to the soaring coal prices which contribute to the major part of the cost of production and is imported.
The short term outlook of the market is anticipated to be bearish. The political situation, economic imbalances and law and order situation in the country are the major disturbing factors. While the market has discounted these factors to a certain extent, if the investors confidence is regained and the sentiment improves the market is expected to move in the upward direction. The proposed Equity Market Opportunity Fund which is expected in the coming days is anticipated to bring recovery. Investors are recommended to adopt wait and see strategy till the end of the bearish spell. Accumulation can be wise on dips in the Oil sector.