Market watch: Dismissal of Army officers sparks panic selling

Benchmark KSE-100 Index falls 0.14%

Our Correspondent April 21, 2016

KARACHI: It was a classic stock market day. A slow start before momentum took stocks higher and then the news came in that shook investors out of their seats.

After hitting an intra-day high of 33,917 points, the index was hit hard when news floated about 11 Army officers being dismissed over corruption charges.

The benchmark-100 index shed around 400 points within an hour, as panic-driven investors offloaded and escaped before value-hunters grabbed the opportunity at lower levels. The index eventually finished 47 points lower, after it had gained around 300 points intra-day.

At close on Thursday, which also saw the highest turnover in the last eight months, the Pakistan Stock Exchange’s benchmark KSE-100 Index recorded a drop of 0.14% or 47.71 points to end at 33,572.13.

Elixir Securities analyst Faisal Bilwani said that it was a nerve-wracking day that ended with marginal losses with market seeing its highest turnover in the last eight months. “Oils held their ground firm on higher crude,” said Bilwani. “Pakistan Petroleum (PPL) and Pakistan Oilfields (POL) hit their upper price limit and Oil and Gas Development Corporation experienced its highest turnover in over six years.

“During early trade, investors brushed aside political noise and concerns of foreign selling as local institutions built fresh positions, pushing benchmark to test 33,900 followed by chaos and panic driven by news of a dozen Army officers sent home on corruption charges.

“News that highlights across-the-board accountability and is positive in our view triggered panic among locals that were haunted by fear of a possible coup in the making.

“Most sectors barring oils were taken for a roller coaster ride with reports of aggressive foreign selling in the wider market.”

Ahmed Saeed Khan of JS Global said volatility prevailed at as the index juggled between an intraday high of +297.42 points and low of -126.30 points.

“The market enjoyed an intraday rally in the earlier hours of trading which was attributed to the exploration and production sector that followed an overnight rally in global crude oil prices,” said Khan.

“The market though lost intraday gains on political concerns with profit taking continuing in the cement sector where the biggest index mover of the sector was Lucky Cement (-0.91%).”

Trade volumes rose to 327 million shares compared with Wednesday’s tally of 263 million shares.

Shares of 384 companies were traded. At the end of the day, 125 stocks closed higher, 226 declined while 33 remained unchanged. The value of shares traded during the day was Rs15.3 billion.

Dewan Motors was the volume leader with 22.4 million shares, gaining Rs0.02 to finish at Rs11.87. It was followed by Byco Petroleum with 17.6 million shares, losing Rs0.84 to close at Rs21.24 and Pace Pakistan with 16.9 million shares, losing Rs0.18 to close at Rs6.55.

Foreign institutional investors were net sellers of Rs1.43 billion during the trading session, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, April 22nd,  2016.

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