Index slips to 35,956.69 as sell-off in global markets intensifies. PHOTO: REUTERS
The KSE-100 index nose-dived from the moment trading began reacting to a slump in major oil indexes after US President Donald Trump banned travel from Europe in a bid to contain the spread of coronavirus, threatening further disruption to the world economy.
At close, the benchmark KSE-100 index recorded a decrease of 1,716.56 points, or 4.56%, to settle at 35,956.69.
Moreover, depreciation in the rupee against the US dollar after a period of stability and uncertainty over the upcoming monetary policy announcement also wreaked havoc at the bourse.
Arif Habib Limited (AHL) Head of Research Samiullah Tariq said that the market was down due to decline in oil prices, falling regional markets and weaker rupee against the dollar.
With no respite in sight, the persistent sell-off once again triggered a halt in trading activity for 45 minutes later in the day.
"The market halt is triggered as a standard protocol for risk management purposes," stated a PSX press release.
The 'market halt' had been introduced by the Securities and Exchange Commission of Pakistan (SECP) in PSX regulations in December 2019. It comes into action when the KSE-30 index moves 4% either way and remains there for five consecutive minutes.
The index extended its losses after resumption of trading ending the session with massive losses.
On the global front, Wall Street stocks recorded a plunge on Wednesday, with the Dow confirming a bear market for the first time since the financial crisis after the World Health Organization (WHO) declared the coronavirus outbreak a pandemic. All three major US stock averages ended the session sharply lower
In line with the bearish trend of US equities, European shares tumbled to their lowest in almost four years, with the benchmark STOXX 600 index falling 4.9% in early deals. Travel and leisure stocks shed 8.6%, hitting their lowest in more than six years.
On the Asian front, Japan's Nikkei crumbled 4.4% to a trough last seen almost three years ago while MSCI's broadest index of Asia-Pacific shares outside Japan fell 4.7%.
Meanwhile, in the oil market, Brent crude was down $2.01, or 5.6%, at $33.78 by around 0930 GMT. US crude was down $1.77, or 5.4%, at $31.21.
Concerns over the long-term impact of the coronavirus pandemic have ravaged markets and disrupted global supply chains as the world struggles to contain further spread and economic damage.
Despite stimulus efforts to soften the impact, investors continued to panic and offload investments in risky assets for safe havens.
The combined impact of all the developments also shook up the Pakistan Stock Exchange, which saw the index drop below the significant 36,000-mark barrier.
Reeling from the plunge in international crude prices, scrips in exploration and production and oil marketing sectors nosedived to finish entirely in the red.
On the other hand, AHL Head of Equity Sales Saad bin Ahmed told The Express Tribune, "Well the main reason behind sell-off is global turmoil and oil supply glut amidst low demand. Local investors are cautious and risk averse, which is why they turn to sell easily with a whim of negative trigger."
Earlier, the market had rallied on expectations of a rate cut, however, panic selling prompted investors to seek safe haven assets. "Although hints of rate cut are obvious, but the market seems to discount that and is considering other stable asset classes," he added.
Overall, trading volumes increased to 230.7 million shares compared with Wednesday's tally of 217.6 million. The value of shares traded during the day was Rs9.8 billion.
Shares of 323 companies were traded. At the end of the day, 42 stocks closed higher, 271 declined and 10 remained unchanged.
The Bank of Punjab was the volume leader with 28 million shares, losing Rs0.74 to close at Rs10.2. It was followed by Fauji Cement with 17.4 million shares, losing Rs1.28 to close at Rs17.19 and Maple Leaf Cement with 16.8 million shares, losing Rs1.97 to close at Rs27.42.
Foreign institutional investors were net sellers of Rs551.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.
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