Market watch: Stocks hammered as KSE-100 dives 861 points

Concerns over macroeconomic situation drag benchmark index below 40,000

KARACHI: Stocks took a beating on Friday as concerns over macroeconomic situation of the country and political developments pushed the KSE-100 index down by 1,057 points in intra-day trading.

Earlier, the market lost 745 points before midday break.

The plunge came on the back of a number of developments on the economic front, which sparked panic among investors. Topline Securities' analyst Nabeel Khurshid said market participants reacted to an alarming dip in foreign exchange reserves of the central bank.

According to data shared by the State Bank of Pakistan (SBP) on Thursday, the official foreign currency reserves dropped to nearly a four-year low of just $8.4 billion. Last time, on November 21, 2014, the country's reserves had slid to $8.5 billion.

When trading resumed after the midday break, a slight ascent was witnessed, but it was short-lived as news of Shehbaz Sharif being taken into custody added fuel to the bearish sentiment.



The National Accountability Bureau (NAB) arrested Pakistan Muslim League-Nawaz (PML-N) President Shehbaz Sharif in the Ashiana-e-Iqbal Housing Scheme scam.

At close, the benchmark KSE 100-share Index recorded a decrease of 860.77 points or 2.15% to settle at 39,226.35.

Additionally, the Oil and Gas Regulatory Authority (Ogra) notified up to 143% increase in prices of natural gas sold by public utilities to different types of retail consumers, which came into effect on September 27, 2018.

This also contributed to the overall negative sentiment, taking the index below the key psychological barrier of 40,000.

A team of the International Monetary Fund (IMF), which held talks with high-ups of the government in Islamabad over the past few days, also concluded its visit.



Following the talks, the finance ministry told the prime minister that an IMF bailout package remained the only viable option for Pakistan to stop the deterioration in macroeconomic indicators. The fund has recommended some harsh measures for stabilising the economy.

"Bears once again dominated trading due to the drop in foreign exchange reserves before the market took the midday break. In the second half, the market took a further dip when NAB detained PML-N President Shehbaz Sharif in the Rs14 billion Ashiana-e-Iqbal Housing Scheme case," said JS Global analyst Danish Ladhani in his report.

All sectors came under pressure and energy, cement and financial stocks contributed most of the points to the decline in the index.

Cherat Cement (-4.62%) and Maple Leaf Cement (-4.85%) closed near their lower limits whereas DG Khan Cement (-3.27%) and Lucky Cement (-2.60%) were also in the red. In the financial sector, United Bank (-3.63%) was the major laggard.



"Moving forward, we expect the market to remain volatile and choppy with lack of immediate triggers," Ladhani said.

Overall, trading volumes increased to 154.1 million shares compared with Thursday's tally of 110.5 million. The value of shares traded during the day was Rs5.4 billion.

Shares of 367 companies were traded. At the end of the day, 43 stocks closed higher, 311 declined and 13 remained unchanged.

WorldCall Telecom was the volume leader with 9.3 million shares, gaining Rs0.04 to close at Rs1.68. It was followed by The Bank of Punjab with 8.8 million shares, losing Rs0.29 to close at Rs10.97 and Pakistan International Bulk Terminal with 8 million shares, losing Rs0.66 to close at Rs9.90.

Foreign institutional investors were net sellers of Rs318 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.