Market watch: Stocks bleed as KSE-100 plunges 805 points
Movement in currency, anticipation of harsh measures in upcoming budget drive bearish sentiment
Benchmark index drops intra-day to 52-week low, eventually settles at 33,166.62. PHOTO: PPI / FILE
KARACHI:
Stocks endured another round of battering on Friday as the KSE-100 index dived over 900 points in intra-day trading amid concerns over the macroeconomic indicators.
Investors once again reacted to the rupee depreciation as the currency slumped to a new all-time low at 149.35 to the US dollar in the inter-bank market. It was the second successive day when the rupee lost significant ground in a fresh round of depreciation.
In the wake of rupee's plunge, the KSE-100 index plunged to a low of 33,005.99 points because investors offloaded stocks.
"The declining trend continued at the bourse and the KSE-100 index touched a new 52-week low at 33,005.99 points," stated Aba Ali Habib Securities in its report.
At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 804.50 points, or 2.37%, to settle at 33,166.62.
JS Global Chief Commercial Officer Khurram Schehzad told The Express Tribune that uncertainty was fuelling bearish sentiments in the stock market. Investors were cautious and stayed largely on the sidelines, keeping volumes low, which dragged share prices lower.
Schehzad pointed out that fluctuations in the currency market, a bleak economic growth outlook and concerns over the upcoming budget were some factors that contributed to the negative trend.
He added that even now Pakistan was only technically in the IMF programme and apart from an agreement there were no details on how the government planned to take things forward. "Uncertainty kills investor confidence. In this situation, people usually dump (stocks)."
Worries regarding the upcoming budget also weighed on the market as participants feared that positive measures introduced by former finance minister Asad Umar earlier may be reversed.
An anticipated hike in the policy rate in the monetary policy announcement early next week also added to the sombre mood.
Schehzad emphasised that the recent MSCI review where it retained Pakistan's position in the Emerging Market Index was a positive sign, but such developments were few and the negatives outweighed the positives.
JS Global analyst Maaz Mulla said bloodshed was witnessed at the bourse as the KSE-100 index hit an intra-day low of 965 points. "Pressure was witnessed after the Pakistani rupee declined against the US dollar in the inter-bank market and hit a new low of Rs150," he said.
Furthermore, the analyst said, the State Bank of Pakistan (SBP) was expected to further tighten the monetary policy stance on May 20 by increasing the policy rate by 50-100 basis points to curb aggregate demand and ensure economic stability.
Fauji Fertiliser Company (-4.7%), Engro (-2.9%), Pakistan Petroleum (-2.8%), Pakistan Oilfields (-3.3%) and Bank AL Habib (-1.7%) were among major laggards.
Investors lost confidence for a second successive day in the cement sector where DG Khan Cement (-5%), Cherat Cement (-5%), Pioneer Cement (-5%), Maple Leaf Cement (-5%) and Fauji Cement (-6.2%) all closed limit down.
The exploration and production (E&P) sector received a hammering where Pakistan Oilfields (-3.3%), Pakistan Petroleum (-2.8%) and Oil and Gas Development Company (-2.3%) remained in the red zone.
"Moving forward, we expect bearish sentiments to persist on the back of weak economic indicators. Also, potential redemptions in mutual funds are likely to cause further selling pressure. Hence, we recommend investors to remain cautious in trading," the analyst added.
Overall, trading volumes fell to 90.4 million shares compared with Thursday's tally of 108.6 million. The value of shares traded during the day was Rs3.04 billion.
Shares of 329 companies were traded. At the end of the day, 31 stocks closed higher, 286 declined and 12 remained unchanged.
K-Electric was the volume leader with 15.3 million shares, losing Rs0.33 to close at Rs3.67. It was followed by Pakistan International Bulk Terminal with 5.6 million shares, losing Rs0.45 to close at Rs7.59 and Unity Foods with 5.2 million shares, losing Re1 to close at Rs8.25.
Foreign institutional investors were net buyers of Rs951.6 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.
Stocks endured another round of battering on Friday as the KSE-100 index dived over 900 points in intra-day trading amid concerns over the macroeconomic indicators.
Investors once again reacted to the rupee depreciation as the currency slumped to a new all-time low at 149.35 to the US dollar in the inter-bank market. It was the second successive day when the rupee lost significant ground in a fresh round of depreciation.
In the wake of rupee's plunge, the KSE-100 index plunged to a low of 33,005.99 points because investors offloaded stocks.
"The declining trend continued at the bourse and the KSE-100 index touched a new 52-week low at 33,005.99 points," stated Aba Ali Habib Securities in its report.
At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 804.50 points, or 2.37%, to settle at 33,166.62.
JS Global Chief Commercial Officer Khurram Schehzad told The Express Tribune that uncertainty was fuelling bearish sentiments in the stock market. Investors were cautious and stayed largely on the sidelines, keeping volumes low, which dragged share prices lower.
Schehzad pointed out that fluctuations in the currency market, a bleak economic growth outlook and concerns over the upcoming budget were some factors that contributed to the negative trend.
He added that even now Pakistan was only technically in the IMF programme and apart from an agreement there were no details on how the government planned to take things forward. "Uncertainty kills investor confidence. In this situation, people usually dump (stocks)."
Worries regarding the upcoming budget also weighed on the market as participants feared that positive measures introduced by former finance minister Asad Umar earlier may be reversed.
An anticipated hike in the policy rate in the monetary policy announcement early next week also added to the sombre mood.
Schehzad emphasised that the recent MSCI review where it retained Pakistan's position in the Emerging Market Index was a positive sign, but such developments were few and the negatives outweighed the positives.
JS Global analyst Maaz Mulla said bloodshed was witnessed at the bourse as the KSE-100 index hit an intra-day low of 965 points. "Pressure was witnessed after the Pakistani rupee declined against the US dollar in the inter-bank market and hit a new low of Rs150," he said.
Furthermore, the analyst said, the State Bank of Pakistan (SBP) was expected to further tighten the monetary policy stance on May 20 by increasing the policy rate by 50-100 basis points to curb aggregate demand and ensure economic stability.
Fauji Fertiliser Company (-4.7%), Engro (-2.9%), Pakistan Petroleum (-2.8%), Pakistan Oilfields (-3.3%) and Bank AL Habib (-1.7%) were among major laggards.
Investors lost confidence for a second successive day in the cement sector where DG Khan Cement (-5%), Cherat Cement (-5%), Pioneer Cement (-5%), Maple Leaf Cement (-5%) and Fauji Cement (-6.2%) all closed limit down.
The exploration and production (E&P) sector received a hammering where Pakistan Oilfields (-3.3%), Pakistan Petroleum (-2.8%) and Oil and Gas Development Company (-2.3%) remained in the red zone.
"Moving forward, we expect bearish sentiments to persist on the back of weak economic indicators. Also, potential redemptions in mutual funds are likely to cause further selling pressure. Hence, we recommend investors to remain cautious in trading," the analyst added.
Overall, trading volumes fell to 90.4 million shares compared with Thursday's tally of 108.6 million. The value of shares traded during the day was Rs3.04 billion.
Shares of 329 companies were traded. At the end of the day, 31 stocks closed higher, 286 declined and 12 remained unchanged.
K-Electric was the volume leader with 15.3 million shares, losing Rs0.33 to close at Rs3.67. It was followed by Pakistan International Bulk Terminal with 5.6 million shares, losing Rs0.45 to close at Rs7.59 and Unity Foods with 5.2 million shares, losing Re1 to close at Rs8.25.
Foreign institutional investors were net buyers of Rs951.6 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.