KARACHI: The stock market continued to bleed for the fifth successive session on Wednesday as the benchmark index fell over 700 points to stand below the 30,300-point mark.
The market maintained the downturn due to aggressive stock selling by mutual funds. Investors in such funds wanted their money back as no improvement had so far been witnessed at the Pakistan Stock Exchange (PSX).
In the morning, the market opened downwards and fell sharply in earlier trading. Some stability emerged at midday but it could not be sustained. Late session selling dragged the market further into the negative territory.
A tense political situation between Pakistan and India over the Kashmir issue took its toll on investor sentiment, which was reflected in trading throughout the day.
The benchmark KSE 100-share Index went down 723.22 points, or 2.33%, to stand at 30,277.45 points at the end of trading.
"The main issue is that mutual funds have continuously been receiving redemption calls from their investors," said Arif Habib Limited Head of Equity Sales Saad bin Ahmed in remarks to The Express Tribune.
The redemption calls prompted mutual funds to sell stocks. The other option investors gave to fund managers was that their investment should be shifted from the risky stock market to risk-free avenues like fixed-income funds.
Foreign investors were aggressively selling some selected stocks in the banking sector, he said. The escalation of regional tensions over the withdrawal of Kashmir's special status also added to the selling pressure at the PSX, he added.
"Technical analysts are now anticipating the market will fall to 25,000-28,000 points," Ahmed said.
The market witnessed stock sell-off across the board. This pulled many stock prices down to the day's lower limit of 5%, or Re1, whichever was higher.
JS Global analyst Maaz Mulla said equities plunged with the benchmark KSE-100 index shedding 723 points and closing at 30,277, down 2.3%.
"Selling pressure continued at the bourse on the back of geopolitical worries," he said. "The market once again succumbed to the ongoing political tensions over the Kashmir issue."
Moreover, on the political front, former finance minister Miftah Ismail was arrested by the National Accountability Bureau (NAB) after the Islamabad High Court rejected his request for an extension in his pre-arrest interim bail in the liquefied natural gas (LNG) import case.
Energy stocks were the major laggards among which Oil and Gas Development Company (-4.1%), Pakistan Petroleum (-3.4%) and Pakistan Oilfields (-3.6%) remained near limit down as international oil prices slipped over growing concerns about the demand outlook in the wake of prolonged China-US trade war.
The financial sector also came under pressure where big banks including HBL (-1.3%), MCB Bank (-0.8%) and UBL (-3.9%) closed in the red.
UBL announced consolidated 1HCY19 earnings per share (EPS) of Rs7.49 vs Rs5.06 in the same period of last year with cash dividend of Rs2.5 per share.
MCB Bank also reported consolidated 1HCY19 EPS of Rs8.79 vs Rs7.95 last year with dividend per share of Rs4.
In the cement sector, Cherat Cement (-1.1%) reported FY19 EPS of Rs9.98 vs Rs12.07 in the previous year and dividend per share of Re1. Lucky Cement (-2.8%) was the major laggard in the aforementioned sector.
Traded value stood at $17 million, up slightly by 3%, while volumes increased 20% to 65 million shares.
Major contribution to the total market volume came from Maple Leaf Cement (-1.1%), K-Electric (-2.2%), Lotte Chemical (-4.8%) and TRG Pakistan (-2.4%).
"Moving ahead, we expect the market to exhibit volatility in coming sessions due to overall ambiguity in the political environment," the analyst added.
Overall, trading volumes increased to 65.3 million shares compared with Tuesday's tally of 54.3 million. The value of shares traded during the day was Rs2.75 billion.
Shares of 326 companies were traded. At the end of the day, 58 stocks closed higher, 249 declined and 19 remained unchanged.
K-Electric was the volume leader with 4.6 million shares, losing Rs0.07 to close at Rs3.15. It was followed by Maple Leaf Cement with 4.4 million shares, losing Rs0.19 to close at Rs16.99 and Lotte Chemical with 2.9 million shares, losing Rs0.79 to close at Rs15.62.
Foreign institutional investors were net buyers of Rs7.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.