Market watch: KSE-100 suffers worst fall of 2018, finishes 1,219 points lower

Benchmark index decreases 2.93% to finish trading at 40,345.68

KARACHI: The KSE-100 suffered its biggest fall of 2018 - both in terms of points and percentage - as uncertainty over outcome of the Avenfield Properties reference took toll on investor sentiment.

The KSE-100 plummeted from the moment trading began, hitting an intra-day low of 40,275 points - a fall of 1,290 points - as  volumes remained low and buying interest negligible. Panic selling meant the index lost 3.07% in intra-day trading with major scrips across the board nearing or hitting their lower price limit.

The panic comes a day after the accountability court reserved its judgement on the Avenfield properties case, saying that the decision will be announced on July 6.

The reference is among those filed by the National Accountability Bureau (NAB) against former prime minister Nawaz Sharif and his children on orders given by the Supreme Court during the Panamagate case.

"Verdict (on the Avenfield reference) is making investors jittery," Samiullah Tariq, head of research at Arif Habib Limited, told The Express Tribune. "Investors fear clashes and deteriorating law and order in the aftermath of the verdict."

Market talk suggested that the outcome of the verdict is casting a shadow on events leading up to the general elections slated to be held on July 25.



With macroeconomic indicators worsening in an election year, analysts and followers predict a further weakening of Pakistan's economic position. As rupee weakens and oil prices rise, triggering inflation, rising interest rates and subdued demand is likely to take toll on economic growth.

At close on Wednesday, the benchmark KSE 100-share Index recorded a decrease of 1,218.74 points or 2.93% to finish at 40,345.68.

"Economic indicators are worrying, and causing concern among investors," said Ahsan Arshad, deputy head of research at Taurus Securities. "This has taken a toll on the KSE-100. The Avenfield verdict is adding to the jitter."

Elixir Securities' analyst Ali Raza said equities closed sharply lower as uncertainty over domestic politics amid weak macros weighed heavily on the market.

"Moreover, latest report by credit rating agency Fitch Ratings Inc highlighting increased external risks for Pakistan also spooked investors. The declines in the market were broad based with nearly all sectors closing deep in the red and the benchmark witnessing a sharp decline of nearly 3%, most in almost eleven months," Raza remarked.



Institutional investors, primarily local asset managers, reportedly turned aggressive sellers with major dent coming from cements (-4.7%), E&Ps (-3.8%), financials (-2.9%), steels (-4.9%) etc.

"[We] expect market to remain under pressure on Thursday; however, oversold conditions may lead to a possible bounce back on Friday once the court verdict is announced. That said, medium-term outlook remains bleak as weak macros would keep a lid on the upside."

Overall, trading volumes increased to 117.6 million shares compared with Tuesday's tally of 104 million. The value of shares traded during the day was Rs5.8 billion.

Shares of 343 companies were traded. At the end of the day, 28 stocks closed higher, 300 declined while 15 remained unchanged.

Pak Elektron was the volume leader with 10.3 million shares, losing Rs1.81 to close at Rs34.45. It was followed by Bank of Punjab with 6.9 million shares, losing Rs0.68 to close at Rs11.40 and TRG Pakistan with 4.5 million shares, losing Rs1.43 to close at Rs27.35.

Foreign institutional investors were net buyers of Rs6.97 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.