KARACHI: Bears dominated the stock market on Wednesday as the benchmark index nosedived over 600 points in the wake of multiple negative triggers that encircled many index-heavy sectors.
Investor sentiments weakened in the market following reports that approval of a new tax amnesty plan had been delayed amid reservations by some cabinet members who believed that the scheme would spark political and constitutional challenges for the government.
Earlier, the trading session opened on a positive note, but the market soon turned bearish as the State Bank of Pakistan issued a new regulation that called for transferring different government bank deposits to a single treasury account.
As negative triggers dominated trading, oil and gas marketing companies, cement and fertiliser sectors particularly came under pressure.
At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 629.38 points, or 1.68%, to settle at 36,752.57.
Arif Habib Limited, in its report, stated that profit-booking at the bourse turned into panic selling, thanks to the banking sector.
“The market opened 5-point plus and gained a total of 37 points after which selling pressure started building,” it said. “Oil and gas marketing companies, cement and fertiliser were the sectors that saw some uptick in the beginning, however, selling pressure in the engineering sector on the back of Tuesday’s disappointing (ISL) result and banks (due to the proposal of setting up a single treasury account) caused havoc.”
The Bank of Punjab’s stock hit its lower circuit with trading in 50 million shares by the end of the session.
Amongst other banking-sector stocks, Habib Bank Limited (HBL) also touched the lower circuit, which added to pressure on the index. Overall, the banking sector saw trading in 65 million shares, followed by Unity Foods (R) and cement stocks.
JS Global analyst Danish Ladhani said equities ended on a negative note with the benchmark KSE-100 index shedding 629 points and closing at 36,752.
“The market came under pressure over a lack of clarity on the economic front,” he said. “The banking sector led the fall as there were rumours in the market that the IMF had asked the government of Pakistan to withdraw all government deposits from the banking sector and place them with the State Bank.”
There was talk in the market that a single treasury account would be set up, which would manage all government money. However, it was not clear whether the government would withdraw all the money from the banks or not, Ladhani said.
“We expect the market to remain choppy and volatile ahead. We recommend investors to stay cautious in the short run ahead of an IMF meeting,” the analyst said.
Overall, trading volumes increased to 172.9 million shares compared with Tuesday’s tally of 140 million. The value of shares traded during the day was Rs4.9 billion.
Shares of 357 companies were traded. At the end of the day, 68 stocks closed higher, 274 declined and 15 remained unchanged.
The Bank of Punjab (XD) was the volume leader with 51.5 million shares, losing Re1 to close at Rs12.54. It was followed by Unity Foods (R) with 23.3 million shares, losing Rs0.59 to close at Rs0.95 and Maple Leaf Cement with 6.8 million shares, losing Rs0.56 to close at Rs30.99.
Foreign institutional investors were net buyers of Rs102.3 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.