Market watch: Stocks hammered as KSE-100 plunges over 1,100 points

Benchmark index drops 2.81% to settle at 38,784.66

KARACHI: In a drastic turn of events, the KSE-100 Index shifted from its usually dull performance to a deep dive into the red. Rising political noise and sector-specific news sent the benchmark index plunging over 1,100 points.

Stocks faced selling pressure across the board as reports surfaced of planned fresh protests, which have an unfortunate history of eventually turning violent, against the government.

Additionally, US President Donald Trump's move to recognise Jerusalem as the capital of Israel stoked fears of further political turbulence in the Middle East as well as backlash from the Muslim world.

"Such developments instil fear in the minds of investors as the road ahead gets trickier," said an analyst of a brokerage house, reacting to the KSE-100's fall that resulted in the benchmark going below 39,000 points.

At the end of trading, the benchmark KSE 100-share Index registered a decrease of 1,122.66 points or 2.81% to settle at 38,784.66.

According to Elixir Securities, Pakistan equities lost ground with the benchmark KSE-100 Index sinking over 1,100 points or 2.8% primarily on political noise.

"The market opened lower and declined steadily as sentiments were mainly dented by a hint from cleric Tahirul Qadri of protest against the government over the Model Town incident report while opposition parties Pakistan Tehreek-e-Insaf and Pakistan Peoples Party pledged their support for the protest call," stated Elixir.



What started as a knee-jerk reaction to the rise in political noise in early trading turned into a full-blown hammering across the board as the day progressed with notable blue chips skidding lower and leading the decline and institutional sellers struggling to offload amid no serious buyers on the screen.

Both Sui Northern Gas Pipelines (-5%) and Kot Addu Power Co (-5%) extended their sharp losses for the third day. The former fell on uncertainty over the return proposed by the oil and gas regulator and the latter slumped on concerns that extension in its power purchase agreement was unlikely beyond FY21 and deal with Hub Power (-3.1%) may not materialise.

"We see volatile trading and the market is likely to remain under pressure on Friday on caution over domestic politics," the report added.

JS Global analyst Maaz Mulla said the market remained under pressure throughout the trading session because of aggressive selling.

"A sizeable number of stocks hit their lower locks due to which the KSE-100 Index shed 1,123 points to close at 38,785 (-3%)," Mulla said.



Major contributors to the plunge were United Bank (-4.75%), Habib Bank (-3.93%), Engro (-3.38%), Oil and Gas Development Company (OGDC, -2.22%) and Pakistan State Oil (-5%), cumulatively contributing -323 points to the index. Gas utilities SNGPL (-5%) and Sui Southern Gas Company (-5%) stood in the red zone following news of a revised tariff regime proposed by the regulator.

Selling pressure was also witnessed in the banking sector where big banks including United Bank and Habib Bank along with MCB Bank (-2.31%) and National Bank (-3.99%) fell. Investors opted to sell  exploration and production stocks in the negative market as Pakistan Oilfields (-3.19%), Pakistan Petroleum (-1.28%) and OGDC (-2.22%) all underwent a price decline.

"Moving forward, we recommend investors to stay cautious at current levels, where any upside could be considered as an opportunity to reduce short-term positions or book profits," he said.

Overall, trading volumes rose to 163 million shares compared with Wednesday's tally of 149 million.

Shares of 363 companies were traded. At the end of the day, 46 stocks closed higher, 301 declined while 16 remained unchanged. The value of shares traded during the day was Rs6.2 billion.

K-Electric was the volume leader with 13.7 million shares, losing Rs0.41 to close at Rs6.23. It was followed by WorldCall Telecom with 12.9 million shares, losing Rs0.19 to close at Rs3 and Dewan Cement with 9.8 million shares, gaining Rs0.92 to close at Rs15.07.

Foreign institutional investors were net buyers of Rs136.8 million during the trading session, according to data compiled by the National Clearing Company of Pakistan.