Market watch: KSE-100 falls 314 points as Fitch cuts growth forecast

Benchmark index decreases 0.92% to settle at 33,774.43

KARACHI: The KSE-100 index continued to retreat on Thursday and dropped 314 points, ending the fourth consecutive session in the red.

A fresh drop in rupee's value, which tumbled once again and traded at 164.5 against the US dollar during the day, also aided the market's fall. Moreover, Fitch Solutions revised downward Pakistan's growth forecast, which contributed to the decline.

Next Capital analyst M Faizan said the market sell-off was fuelled by mounting investor concerns over the outlook on inflation and interest rate, which could curtail economic growth and have a damaging knock-on effect.

He added that the dollar hit an all-time high at 164.5 against the rupee in early trading but some respite came later in the day when the rupee recovered to 163.35. Owing to weak economic cues, all index-heavy sectors closed in the red.

Earlier, trading started on a positive note and the index touched the intra-day high at 173.36 points but the optimism proved short-lived as the rupee depreciated sharply against the US dollar in just two trading sessions, which raised concerns about another hike in the policy rate and inflation, stated Aba Ali Habib Securities in its report.

Additionally, Fitch Solutions revised down Pakistan's GDP growth forecast to 2.7%, which added to investor concerns, it added.

At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 314.13 points, or 0.92%, to settle at 33,774.43.

Arif Habib Limited, in its report, stated that the downtrend in the market continued as it remained under selling pressure.

The power sector led the volumes with trading in 33 million shares, followed by the financial sector with trading in 19 million shares. K-Electric remained on top for the second consecutive day with 24 million shares, followed by Pak Elektron with 7 million shares.

The financial sector saw price erosion in HBL and UBL, with the former taking a major hit and touching recent lows.

"Similarly, stocks that have a potential negative effect due to the change in rupee-dollar parity performed poorly while those stocks which have a positive impact failed to draw investors' interest due to weak macroeconomic fundamentals," the report added.

JS Global analyst Maaz Mulla said equities closed on a bearish note with the benchmark KSE-100 index shedding 314 points and closing at 33,774.

"After touching a high of +173 points, the market lost steam and dropped to a low of -567 points as an increase in taxes and a hike in gas prices weighed heavily on industrial sectors," he said.

Moreover, the sectors that came under pressure were fertiliser, exploration and production and cement.

Fauji Fertiliser (-3%) and Engro Fertilisers (-2%) were the major laggards in the fertiliser sector.

In the exploration and production sector, Pakistan Petroleum (-2.5%), Oil and Gas Development Company (-1.1%) and Pakistan Oilfields (-0.1%) were in the red as international crude oil prices inched down ahead of the upcoming G20 summit in Japan and a meeting of OPEC and other producers to decide on an extension to output cuts.

Lucky Cement (-2%) was the major laggard in the cement sector. "We expect the market to remain volatile due to developments on the economic and political fronts," the analyst added.

"Furthermore, the International Monetary Fund (IMF) executive board is scheduled to meet in Washington on July 3 to consider a three-year, $6-billion loan for Pakistan."

Overall, trading volumes decreased to 135 million shares compared with Wednesday's tally of 159.7 million. The value of shares traded during the day was Rs4.57 billion.

Shares of 326 companies were traded. At the end of the day, 132 stocks closed higher, 175 declined and 19 remained unchanged.

K-Electric was the volume leader with 25 million shares, losing Rs0.02 to close at Rs4.19. It was followed by Pak Elektron with 7.5 million shares, losing Rs0.48 to close at Rs19.53 and Fauji Fertiliser Bin Qasim XD with 6.5 million shares, gaining Rs0.09 to close at Rs18.04.

Foreign institutional investors were net buyers of Rs714.98 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.