Market watch: Stock prices plunge as bears continue to dominate

Benchmark KSE-100 index loses 389.21 points to close at 41,389.99

KARACHI: After a relief rally on the opening day of the week, the KSE-100 Index failed to sustain its positive trend as stocks tumbled in the red on Wednesday.

Share prices plummeted over 400 points in intra-day trading on concern over the record high fiscal deficit of Rs1.864 trillion and inflation data for August 2017. It recovered slightly but still closed negative.

Oil and banking stocks also kept the stock market under pressure due to uncertainty in global crude prices and weak banking spreads.

At close, the benchmark KSE 100-share Index recorded a decrease of 389.21 points or 0.93% at 41,389.99 points.

According to Elixir Securities, Pakistan equities closed lower wiping out most of Tuesday's gains on institutional selling.

"Market was off to a good start as stocks carried momentum and KSE-100 Index advanced as much as 0.6% in early trade, however, increase was underscored by lower volumes that led to bears taking control and the index steadily declined thereafter falling back towards 41,400 level," stated Elixir.



Habib Bank (HBL PA -5%) remained the laggard, however, it churned volumes of about 6 million shares, highest since August 1, as investors finally hopped in on hopes of a bounce back after near 26% losses since penalty announcement last Monday.

"We do see sharp volatility ahead with flows guiding stock direction and possibly some stability by end of the month when hearing for review of the said fine is due," the report added.

Major sectors including cements and financials closed lower on selling pressure while sideboards too followed suit on retail selling.

Pakistan Petroleum (PPL PA +1.5%), however, closed in green, bucking the downtrend on Ogra's notification of increase in wellhead gas prices.

"We see volatile trading with index consolidating near current levels while flows primarily from foreigners will likely play a crucial role in regaining the investors' confidence in days ahead."

JS Global analyst Maaz Mulla said the KSE-100 index closed at 41,390, 389 points below Tuesday's closing level, where HBL (-5.0%), EFERT (-1.4%), DGKC (-4.6%), and LUCK (-1.8%) were the major losers dragging down the market by 194 points cumulatively.



Volumes improved, depicting a day-on-day increase of 37%. The market could not sustain positivity that was witnessed in the initial hours and reversed on the back of prevailing investor concerns.

The impact of CPI inflation numbers remained neutral as inflation for Aug-2017 clocked-in at 3.4% YoY, in-line with street expectations of 3.3% YoY.

HBL (-5.0%), after witnessing lower circuit for five consecutive sessions, managed to trade six million shares, and close at its lower lock once again. Cement sector witnessed selling pressure over concerns of negative price adjustments on additional capacities. DGKC (-4.6%), POWER (-3.8%) and MLCF (-2.3%) were the major loser of the aforementioned sector.

Commercial banks also remained in the red zone except for MCB (+1.7%), which gained to close in the green.

"We believe noise across international and domestic political scenario, falling dollar reserves and uncertainty over balance of payment are factors contributing to the negative sentiment in the market," Mulla added.



"We recommend investors to make use of every opportunity to liquidate short-term positions and invest in stocks that could benefit from rupee devaluation."

Overall, trading volumes rose to 147 million shares compared with Tuesday's tally of 107 million.

Shares of 387 companies were traded. At the end of the day, 97 stocks closed higher, 272 declined while 18 remained unchanged. The value of shares traded during the day was Rs8.6 billion.

TRG Pakistan was the volume leader with 16 million shares, gaining Rs0.10 to close at Rs37.24. It was followed by JS Bank with 12.5 million shares, losing Rs0.10 to close at Rs8.15 and Aisha Steel Mills with 8.2 million shares, losing Rs0.49 to close at Rs19.49.

Foreign institutional investors were net sellers of Rs68 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.