KARACHI: Following a day's relief, the KSE-100 index again turned bearish on Wednesday as it dipped 551 points and closed at the lowest level since June 2016.
During stock trading, macroeconomic and growth worries weighed heavily on investor sentiments after the International Monetary Fund (IMF) trimmed its growth forecast for Pakistan to 2.9% for FY19 and 2.8% for FY20 while demanding structural reforms to cope with the twin deficit.
Investor concerns over the IMF report, risks over MSCI's downgrade of Pakistan's bourse to the frontier market status and pre-budget uncertainty played the role of catalysts in the market's bearish close.
Market watch: KSE-100 recovers 208 points owing to improved economic data
Following a sideways opening, selling pressure emerged at the bourse, which deepened with time. Weak investor sentiments led to a steady fall in the KSE-100 index throughout the day and it closed below 36,600 points.
A few gains, made in the early hours, were wiped out soon and the decline gained pace after midday. All index-heavy sectors remained in the red.
At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 550.65 points, or 1.48%, to settle at 36,579.32.
JS Global analyst Danish Ladhani said the bourse hit a high of +40 points and low of -665 points during the day, adding the market came under duress due to selling pressure from local institutions.
Pressure came from the cement sector where Lucky Cement (-4.9%), DG Khan Cement (-5%), Fauji Cement (-5.6%), Maple Leaf Cement (-5%), Cherat Cement (-5%) and Pioneer Cement (-5%) closed at or near their lower locks.
The cement sector was closely followed by exploration and production and financial sectors where Oil and Gas Development Company (OGDC, -1.2%), Pakistan Petroleum (-1.1%), HBL (-1.2%), MCB Bank (-0.9%) and Bank AL Habib (-0.3%) were the major laggards.
OGDC (-1.2%), Lucky Cement (-4.9%), Pakistan State Oil (-3.4%), HBL (-1.2%), Pakistan Petroleum (-1.1%), Fauji Cement (-1.5%), MCB Bank (-0.9%), and Engro (-0.9%) were the major stocks that cumulatively contributed 204 points to the negative close of the market.
Average daily traded value stood at $29 million, down 30% while traded volumes stood at 141 million, down 12%.
Market watch: Weak economy hits KSE-100 hard as index slips below 37,000
"We expect the market to remain choppy and volatile and recommend investors to stay cautious in the short run ahead of MSCI rebalancing and IMF meeting this week," the analyst added.
Topline Securities, in its report, stated the KSE-100 index closed at 36,579, which was a 33-month low. "A downward revision in growth forecast by the IMF and pressure on cement stocks amid reduction in cement prices caused selling pressure in the market," it said.
"As per the IMF, Pakistan's economy will grow at an average of 2.5% over five years and its external imbalance will remain elevated."
Overall, trading volumes decreased to 141.2 million shares compared with Tuesday's tally of 160.5 million. The value of shares traded during the day was Rs4.1 billion.
Shares of 347 companies were traded. At the end of the day, 43 stocks closed higher, 284 declined and 20 remained unchanged.
Unity Foods (R) was the volume leader with 25.5 million shares, losing Rs0.53 to close at Rs2.25. It was followed by WorldCall Telecom with 18 million shares, losing Rs0.19 to close at Rs1.04 and K-Electric with 11.6 million shares, losing Rs0.28 to close at Rs4.98.
Foreign institutional investors were net sellers of Rs292 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.