Benchmark index decreases following higher than expected inflation data. PHOTO: INP
The KSE-100 index fell sharply from the word 'go' as investors adopted the dump-and-run strategy. The headline national Consumer Price Index (CPI) jumped 14.6% in January taking the overall inflation reading to a nine-year high which significantly dented investor sentiments.
Further adding to the woes, the global outbreak of the coronavirus continued to hammer global equities, the brunt of which was also borne by the domestic bourse.
BMA Research Executive Director Saad Hashmi told The Express Tribune that the inflation reading was much higher than expected and eliminated all hopes for easing of monetary policy in March.
"Market participants were expecting the State Bank of Pakistan to reduce interest rate in its monetary policy announcement due in March 2020, however, the recent inflation level has erased all hopes for reduction," he said.
"This mainly sparked pessimism in the market and hence it is being reflected in the rapid sell off."
On the other hand, he continued, the Chinese stock market opened on Monday after an extended lunar New Year holiday, owing to the outbreak of coronavirus, and plunged close to 9% within initial hours, which pointed to a slowdown in the global economy.
"China is a massive trading partner of Pakistan and a slowdown in its economy means it will have a negative impact on Pakistan's trade numbers as well," he said.
"This is another reason for negative sentiments at the bourse."
Endorsing his claims, Arif Habib Head of Research Samiullah Tariq said the inflation level was forecasted to fall between 13.6-13.7% and the 14.6% figure was way above expectations, which drastically impacted investor sentiments.
He added that global markets were down owing to fears over the coronavirus and regional markets had fallen as well therefore Pakistan's stock market was also affected.
At close, the benchmark KSE-100 index recorded a decrease of 1,221.55 points, or 2.93%, to settle at 40,409.38.
JS Global analyst Danish Ladhani said that equities closed Monday on a negative note with the benchmark KSE-100 Index shedding 1,222 points, closing at 40,409 levels.
"Market nosedived more than 3.3% in Monday's trading session as headline inflation skyrocketed to a multi-year high of 14.56% YoY, surpassing the market consensus of 13.5-13.7%," Ladhani remarked.
PPL (-5.3%), HBL (-3.7%), ENGRO (-3.8%), OGDC (-4.2%), MCB (-3.8%), BAHL (-2.8%), POL (-3.7%) and LUCK (-3.5%) cumulatively took 580 points from the index pushing it towards the negative close.
"However, we expect market will remain sideways in the short-term on the back of uncertainty on the political front and upcoming IMF third review and FATF review session in February," he added.
Overall, trading volumes increased to 203.1 million shares compared with Friday's tally of 193.9 million. The value of shares traded during the day was Rs7.9 billion.
Shares of 351 companies were traded. At the end of the day, 43 stocks closed higher, 296 declined and 12 remained unchanged.
Bank of Punjab was the volume leader with 23.5 million shares, losing Rs0.35 to close at Rs12.84. It was followed by Hascol Petroleum with 12.7 million shares, losing Rs0.41 to close at Rs25.31 and Maple Leaf Cement with 11.9 million shares, losing Rs1.26 to close at Rs22.45.
Foreign institutional investors were net sellers of Rs255.99 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.
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