Market watch: Carnage in Peshawar, KSE takes a hit as well

Benchmark KSE-100 index sinks 813.82 points

The Karachi Stock Exchange benchmark index fell sharply on Tuesday after a terrorist attack in Peshawar left more than 130 people dead.

The KSE-100 Index dropped 2.57% to close at 30,876 points, which constitutes the biggest drop in the benchmark index in four months.

Although many analysts linked the steep fall in the stock prices to the terror attack, Topline Securities said the drop came in the wake of a global stock market rout.

“While weak oil prices have led to uncertainty over global economic growth, more than 5% drop in China’s benchmark Shanghai Composite Index last week has triggered mega sell-off in global stock markets,” Topline Securities said in a report.

MSCI Emerging Markets Index has come down 6% while MSCI Frontier Markets Index has decreased 7% since the start of December.

It said foreign investors’ portfolio investments amounted to $32 million in the last seven trading sessions, which signals that the Pakistan market is following a global trend. “All countries, whether they are net exporter or net importer of oil, are being affected,” it added.

Besides the liquidity crunch in the local market due to recent public offerings, Topline Securities noted that financial institutions do not typically lend aggressively against shares before December’s closing. This affects liquidity, as investors find it difficult to leveraging their positions, it said.

Meanwhile, Elixir Securities analyst Faisal Bilwani said equities struggled to find strength in absence of buyers.

“Reports of foreign selling and concerns on law and order kept wider market under pressure. News of political parties coming together and PTI postponing protests failed to bring any upside as KSE100 broke 31,000 support level,” he said.

“Nervous investors will closely follow the reaction from foreigners as the Peshawar attack brings back law and order and security situation in focus.

“The index is likely to test 30,300 with cements, textiles and financials seeing most support at lows,” Bilwani concluded.

On the other hand, JS Global analyst Mohammad Mobeen said record low international oil prices kept the index heavy weight oil and gas under pressure as Mari (‐5.0%), Pakistan Petroleum Limited (‐5.0%), Oil and Gas Development Company (‐5.0%) and Pakistan Oilfield Limited (‐5.0%) closed on weakness.

Trade volumes rose to 262 million shares compared to 215 million on Monday.

Shares of 391 companies were traded on Tuesday. Of these, 321 companies declined, 52 closed higher and 18 remained unchanged. The value of shares traded during the day was Rs15.2 billion.

The Bank of Punjab was the volume leader with 29 million shares, gaining Rs0.27 to close at Rs10.17. It was followed by Jahangir Siddiqui Limited with 11.4 million shares, losing Rs0.50 to close at Rs14.54 and Maple Leaf Cement with 10.9 million shares, losing Rs1.52 to close at Rs40.60.

Foreign institutional investors were net sellers of Rs65 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.