Market watch: KSE-100 dives 1,002 points as macroeconomic concerns persist

Benchmark index decreases 2.55% to settle at 38,300.63 points

KARACHI: In line with the tumultuous session of the preceding day, bears continued to dominate trading at the stock exchange on Thursday as they pushed the benchmark index down by over 1,000 points, taking it far below 39,000.

Negative sentiments came on the back of deteriorating macroeconomic condition of the country, which caused jittery investors to resort to profit-taking.

After a brief open in the positive territory, the KSE-100 index tumbled to the intra-day low of 38,247 points as selling pressure drove the market down. Additionally, uncertainty about the government's economic policies also dented sentiments.

At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 1,002.48 points or 2.55% to settle at 38,300.63.

"The market is down due to macroeconomic uncertainty," Arif Habib Limited Head of Research Samiullah Tariq told The Express Tribune.

Pakistan's depleting capability to make import payments and debt repayment and the runaway current account deficit were some of the big challenges in the economy. "The situation is bad for the stock market."



"High inflation and the skyrocketing interest rate will keep the market under pressure till the end of March 2019," Tariq anticipated.

"Govt authorities are expected to restrict the current account deficit, apply brakes on the accelerating inflation and keep interest rate at the peak by March 2019," he said.

Settlement of macroeconomic indicators by that time would pave the way for the market's turnaround which might bounce back from there onwards, he said and voiced hope that the market would continue to move around 38,000 points in the short-to-medium run.

"Auto and cement stocks may remain under selling pressure, while bank, fertiliser, exploration and production and oil stocks may invite renewed buying," he said. Tariq anticipated that the economy would be back on the path of progress.

Elixir Securities' analyst Murtaza Jafar said the benchmark KSE-100 index continued its downward trajectory while tracking losses in most of the regional indices.



"Aggressive sell-off was reported by local funds on expectations that liquidity will be increasingly diverted from the equity to income/money market funds in the wake of the recent rise in policy rate to 10%," said Jafar.

"To recall, the sell-off by mutual funds so far this month stands at $19 million, while insurance companies have been the only notable buyers, mopping up shares of $15 million.

"We expect the market to remain under pressure until clarity emerges on Pakistan's entry into an IMF programme."

JS Global analyst Maaz Mulla said carnage was again witnessed at the bourse as the KSE-100 index lost 1,002 points to close at 38,301.

"This pressure in the market was on the back of likely redemptions in mutual funds. MCB Bank (-4.5%), Pakistan Petroleum (-3.1%), Engro (-3%), Habib Bank (-2.6%) and Pakistan State Oil (-4.7%) were among major laggards which dragged the index down by 299 points," Mulla said.

The banking sector lost ground and big banks contributed 193 points to the declining index. Allied Bank (-5%), MCB Bank, Habib Bank, United Bank (-1.9%) and National Bank (-2%) remained in the red zone.



The cement sector received a battering where big players Pioneer Cement (-4.7%), Cherat Cement (-2.6%), DG Khan Cement (-2.6%), Fauji Cement (-2.1%) and Lucky Cement (-2.1%) shed values.

"Moving forward, we expect bearish sentiment to continue on the back of political uncertainty and concerns over the economic indicators. Also, potential redemptions in mutual funds are likely to spark further selling. Hence, we recommend investors to remain cautious," he added.

Overall, trading volumes increased to 189.8 million shares compared with Wednesday's tally of 138.1 million. The value of shares traded during the day was Rs8.98 billion.

Shares of 358 companies were traded. At the end of the day, 80 stocks closed higher, 262 declined and 16 remained unchanged.

WorldCall Telecom was the volume leader with 20.7 million shares, losing Rs0.08 to close at Rs1.58. It was followed by K-Electric with 15.5 million shares, losing Rs0.14 to close at Rs5.18 and Pak Elektron with 10.6 million shares, losing Rs1.13 to close at Rs24.90.

Foreign institutional investors were net sellers of Rs45.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.