Market watch: Stocks bleed as index plunges to five-year low

Published: August 8, 2019
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PHOTO: REUTERS/FILE

PHOTO: REUTERS/FILE

Benchmark index loses 539.47 points to settle at 29,737.98. PHOTO: AFP PHOTO: REUTERS/FILE
KARACHI: 

Stocks took a beating for the sixth successive session on Thursday as panic selling drove the benchmark index to a five-year low below 29,800 points.

In line with the norm, the KSE-100 fell from the moment trading began, hitting an intra-day low of 29,400 points. Ongoing geopolitical tensions and the outcome of National Security Council (NSC) meeting weighed on the already frayed nerves.

Following India’s decision to abrogate Article 370 of its constitution, which gave the Himalayan region of Kashmir a special status, the Pakistan government decided to downgrade diplomatic ties with India. In response to that, a selling frenzy erupted at the Pakistan Stock Exchange (PSX) with participants offloading stocks across the board.

The KSE-100 index fell below 30,000 after almost five years, Topline Securities CEO Muhammad Sohail said in comments to The Express Tribune.

“The main issue is the suspension of trade ties between Pakistan and India,” Ahsan Mehanti at Arif Habib Limited told The Express Tribune.

“The market has gone deep down due to the emergence of Kashmir issue between the two countries,” he said, adding that the escalation in political tensions remained a big concern for the market.

Mehanti added that the drop in international crude oil prices also put pressure on relevant stocks. “The market has completely ignored improvement in Pakistan’s cross-border trade deficit for July.”

Earlier, the market maintained its downward trajectory owing to dismal macroeconomic indicators, developments on the political front and aggressive stock selling by mutual funds. Investors in such funds wanted their money back as no improvement had so far been witnessed at the PSX.

Furthermore, arrest of former finance minister Miftah Ismail in the LNG case and Maryam Nawaz in the Chaudhry Sugar Mills case also added to the sombre mood.

At close, the benchmark KSE 100-share Index recorded a decrease of 539.47 points, or 1.78%, to settle at 29,737.98 points.

JS Global analyst Maaz Mulla said equities plunged on Thursday with the benchmark KSE-100 index shedding 539 points.

“Selling pressure continued from mutual funds on the back of geopolitical unrest. The market once again succumbed to ongoing tensions over the Kashmir issue,” he said.

Moreover, on the political front, Maryam Nawaz, leader of the Pakistan Muslim League-Nawaz and daughter of former prime minister Nawaz Sharif, was arrested by NAB over corruption charges.

Energy stocks were the major laggards among which Oil and Gas Development Company (-3.2%), Pakistan Petroleum (-2.4%) and Pakistan Oilfields (-5%) closed sharply down as international oil prices slipped on concerns over the demand outlook following escalation in the prolonged Sino-US trade war.

Financial stocks also came under pressure among which HBL (-3%), MCB Bank (-3.6%) and UBL (-2.9%) remained in the red.

Engro Fertilisers (+3%) announced 1HCY19 earnings per share (EPS) of Rs5.38 vs Rs5.35 in the same period of last year with dividend per share of Rs5. Engro (-2.2%) was the major loser.

In the cement sector, Lucky Cement (-3.1%) was the major laggard whereas Fauji Cement (+0.4%), DG Khan Cement (+0.7%) and Maple Leaf Cement (+1.5%) stayed in the green zone.

“Moving ahead, we expect the market to exhibit volatility in coming sessions due to overall ambiguity in the political environment,” Mulla said.

Overall, trading volumes increased to 109.1 million shares compared with Wednesday’s tally of 65.3 million. The value of shares traded during the day was Rs4.3 billion.

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