DAILY STOCK MARKET REPORT: 8th AUGUST,2011

Stock
Karachi Stocks Down 266.79 Points:
KARACHI, Aug 08: The KSE-100 index was at 11108.30, down 266.79 points.
August 5, 2011
5 TOP SCRIPTS GAINERS AND LOOSERS
New Jubilee Ins Rs 2.76 Uni Lever Pak Rs (282.28)
Nadeem Textile Rs 2.56 Nestle Pakistan Rs (145.26)
Pak Datacom Ltd. Rs 1.09 Rafhan Maize Rs (98.32)
BOC (Pak) Ltd. Rs 1.00 Unilever Foods Rs (84.57)
BOC (Pak) Ltd. Rs 1.00 Siemens Pakis Rs (48.80)

KSE 30 – Shares Index Previous 11,228.47, Friday’s 10,769.40, minus 459.07 points.
KSE 100 – Shares Index
Previous 11,846.16, Friday’s 11,375.09, minus 471.07 points.
MARKET CAPITALIZATION
Previous Rs.3,132.377, Friday’s 3,007.485bn, minus 124.892bn.
VOLUME LEADERS
Lotte Pakistan 11.933m, Fauji Fertiliser Bin Qasim,7.033m, KESC 6.426m,J.S.& Co5.752m, TRG Pakistan 5.512m shares.
TOTAL VOLUME 113.170m shares
TOTAL TONE:bearish,total listed 638,actives 303,inacties 335,plus 16,minus 227,unchanged 60


KSE Index plummets by 471 points
KARACHI: The equities on Friday took a massive plunge of four per cent or 471.07 points at 11,375.09, eroding Rs125 billion from the market capital on panic-selling triggered by turmoil on the global stock and commodity markets followed by six per cent fall in the oil prices.
The fall and that too of the order of six per cent in international oil prices always leaves behind a long list of financial casualties as its rise and fall is essentially linked to financial risks in hard money terms, some analysts said and added that is what exactly happened with the global markets followed by its fallout on the local bourse.
However, it was not a largest single-session fall as the benchmark had declined by 4.43 per cent or 491.02 points after imposition of capital gains tax on shares on March 8, 2006 and 696.25 points or 5.5 per cent after the assassination of Benazir Bhutto on Dec 27, 2007.
“There was no market in Asia, Europe and the US, which has not been battered by 3.5 to four per cent on panic-selling creating unprecedented scare involving billion of dollars,” said a leading stock analyst Ahsan Mehanti “and the local market could hardly be an exception and gave in amid fears of massive capital outflow”.
He doubts an immediate recovery of the world markets owing to hanging sword of eurozone sovereign debt and the US economy.
But analyst Samar Iqbal said the massive fall was in a way appeared to be psychological and sympathetic amid fears of flight of foreign capital and hoped most of the market basics are still intact and market will be back on the rails on the strength of upcoming corporate earning reports.
Bulk of the selling remained confined to the blue-chip sector under the lead of oil, fertiliser and some other leading shares, notably Pakistan Oilfields, Fauji Fertiliser, Engro Corporation, National Refinery, Attock Petroleum, which suffered fall ranging from Rs5.98 to Rs17.71.
OGDC, PSO, Shell Pakistan, Pakistan Petroleum and other blue chips, including Nestle Pakistan, Unilever Pakistan and ICI Pakistan also fell sharply.
Out of the total 303 shares, which came in for trading only 16 rose, while 227 fell on selling but no buyers even at the attractively lower prices.
Owing to panic-selling even in the low-priced shares, the turnover figure rose to 113.170m shares from the previous 49m shares, out of the total changes.
The active list was topped by Lotte Pakistan, off Re1 at Rs10.69 on 12m shares followed by Fauji Fertiliser Bin Qasim, easy by 93 paisa at Rs45.14 on 7m shares, KESC, lower by 53 paisa at Rs1.56 also on 7m shares, JS & Co, easy 87 paisa at Rs5.51 on 6m shares, TRG Pakistan, off 42 paisa at Rs1.75 on 6m shares, Azgard Nine, lower 99 paisa at Rs4.58 on 4m shares, and PTCL, off Re1 at Rs10.57 also on 4m shares.
They were followed by Fauji Fertiliser, off Rs4.64 at Rs154 on 4m shares, Bank of Punjab, lower 68 paisa at Rs5.34 on 3m shares and National Bank, off Rs2.43 at Rs46.76 also on 3m shares.
FUTURE CONTRACTS: Leading shares on this counter came in for heavy selling and fell sharply lower under the lead of Pakistan Oilfields, Fauji Fertiliser and Engro Chemical, fell by Rs17.47, Rs5.98 and Rs6.85 respectively at Rs338.88, Rs153.64 and Rs130.36 on 0.834m, 0.672m and 0.411m shares followed by National Bank, off Rs2.47 at Rs47.23 on 0.463m shares.
But Fauji Fertiliser Bin Qasim led the list of actives, off 91 paisa on a large volume of 1.99m shares, while some others were modestly traded.
DEFAULTER COMPANIES: Japan Power led the list of actives, lower by 14 paisa at Re1 on 75,040 shares followed by Genertech Power, unchanged at Rs0.45 on 64,805 shares and Invest Bank, lower 11 paisa at Rs0.21 on 26,523 shares.
Ravi Textiles and Quice Foods also came in for active selling and ended lower on modest turnover and so did Accord Textiles, Service Textiles.
Stocks trade: probe began against 5,600 investors
The Federal Board of Revenue (FBR) has launched large-scale investigation against 5,600 major investors in stock and shares, for which information has been obtained from the National Clearing Company of Pakistan Limited (NCCPL) and Central Depository Company of Pakistan Limited (CDCPL), to bring them into the documented regime.

Sources told Business Recorder here on Sunday that the 5600 Lahore-based investors have made huge investments in stock and trade, but they have neither obtained National Tax Number (NTN) nor were filing their income tax returns. The FBR has issued instructions to the Chief Commissioners of the Regional Tax Office (RTO) Lahore-I and RTO Lahore-II to investigate potential cases where huge investments have been made in the stocks and shares. The FBR has also provided data in electronic format to the field formations to document all major investors in stock and shares.

According to the FBR instructions, the investment in stocks and shares is perhaps the third largest portfolio of domestic investments, ranking only after real estate and bank deposits. Despite its massive volume and equally overwhelming number of transactions, mostly this sector remains out of the tax net. The FBR Directorate General Inland Revenue has made some inroads in the realm of stocks and shares which are shared with the concerned field formations.

The FBR instructions further stated that under the instructions of Securities and Exchange Commission of Pakistan (SECP), all transactions in stocks and shares need to be fully documented. For this purposes, two corporate bodies have been put in place--National Clearing Company of Pakistan Limited, for the provision of clearing and settlement of services to all three stock exchanges in the country, and Central Depository Company of Pakistan Limited, which provides depository services to a wide range of capital market participants which includes brokers, asset management companies, banks (including custodian banks) and general retail investors. This clearly indicates that while NCCP settles daily transactions in stocks and shares, CDC works as the bank/depository of shares, the FBR maintained.

The FBR further stated that while conducting their normal business, computerised national identity card number (CNIC) of individual investor is used by both entities as Unique Identification Number (UIN).

The FBR has gathered information in 5600 cases relating to RTO, Lahore-I/Lahore-II, regarding individual investors who maintain accounts with NCCP/CDC, but they do not exist on the tax roll. Apart from their identifiable particulars, this information also covers bank account information of the said investors as well.

The FBR instructions further said that detailed information of transactions in the cases of individual investors can be obtained directly by the concerned Broadening of Tax Base (BTB) officers from the concerned Company's Secretary/Chief Financial Officer CDC.

The field formations should immediately re-ascertain the jurisdiction of aforementioned cases, and wherever it so requires, the cases may be transferred to the relevant jurisdictions under intimation to the FBR. Secondly, for the processing of cases with valid jurisdiction, the standing operating procedure (SOP) for such cases, already circulated by the FBR is to be followed both in letter and spirit. Any deviation would be treated as express violation of official instructions, FBR instructions to the field formations added.
US rating downgrade causes concerns
KARACHI, Aug 6: The US rating downgrade by Standard & Poor`s created serious concern in the market and among the economists but they see no significant and immediate impact on Pakistan`s exchange rate.
However, they said if the rating downgrade put America into double dip recession, it will hit economies like Pakistan while the US currency will weaken and suffer against currencies including rupee.
Standard & Poor`s, the credit rating agency, said on Friday it was dissatisfied with the plan Congress came up with earlier in the week to reduce the country`s debt.
This is the first time the America`s credit rating has fallen below the highest level, AAA to AA plus. The US had held that rating since 1917.
The move came just days after a gridlocked Congress finally agreed to spending cuts that would reduce the debt by more than $2 trillion.
The news of lowering of US rating shattered the confidence on American economy and the first impact was globally visible in stocks markets.
Pakistan`s premier equity market Karachi Stock Exchange index lost 4 per cent on Friday.
Dr Ishrat Husain, former governor State Bank said the downgrade of US rating was the outcome of their domestic problem. They wanted a bigger cut to reduce their debt and they agreed for a cut of $2 trillion.
However, the latest job data shows improvement, which means not every thing is wrong in the economy, he said.
Dr Ishrat said the American unemployed rate reached 9.1 per cent, while it had reached about 11 per cent during the peak of recession that began in mid of 2007.
It is feared that in aftermath of this downgrade Pakistan may be deprived of aid and loans promised and negotiated earlier.
However, the former SBP chief said Pakistani exports to US would not be affected as `we don`t supply luxury items which are usually the first hit of a recession.`
Also, Pakistan`s export to US is not more than 17 to 18 per cent of the total exports.
The risk of double dip recession in the US could have significant impact on Pakistan. Experts said since US was one of the biggest economies it has vast impact on developing economies and particular on small ones like Pakistan, which could suffer in many ways.
They said while Pakistan might not get the US aid, and loans from donor agencies under the American influence like IMF and the World Bank. They said in case of double dip recession, the US dollar will weaken. However, Dr Ishrat said that no other currency like euro and yen were in good shape to overcome the dollar.
He pointed out the investors have little options to park their money. How long they continue invest in gold of which the prices have crossed record level.
The investors may not abandon dollar as an option to invest, he emphasised.
Topline Securities CEO Mohammad Sohail said investors in Pakistan would be cautious after this downgrade of US rating.
“Those who used to invest in dollar for safety would not prefer to buy dollar unless the risk is over,” said Sohail.
He was of the view that in case of double dip recession in US, the dollar may see a big cut against rupee, however; in short term the impact would not be insignificant on exchange rate.




Mohammed Saleem Mansoori