Market watch: Stocks nosedive on political uncertainty

KARACHI:

Taking cue from last week’s bearish momentum, the stock market slumped nearly 1,000 points on Monday and closed below the 41,000 mark on a string of bad political news.

There was nothing to cheer investors as the market remained range bound till midday. However, the news of Pakistan Muslim League-Nawaz (PML-N) President and leader of opposition in the National Assembly Shehbaz Sharif being arrested by the National Accountability Bureau (NAB) in a money laundering case set off alarm bells. It sent investors to the exit door, who dumped stocks to seek shelter.

The uncertainty mounted when an Islamabad accountability court indicted former president Asif Ali Zardari and his sister Faryal Talpur in a mega money laundering case.

There was some optimism about Pakistan securing another $300 million in budget support loan from the Asian Development Bank (ADB) for building the foreign exchange reserves, but it was still thought to be unsatisfactory.

At close, the benchmark KSE-100 index recorded a decrease of 960.28 points, or 2.3%, to settle at 40,740.95 points.

Arif Habib Limited, in its report, stated that last week’s rollover session had its trickle-down impact on the trading session on Monday, primarily due to low settlement ratios.

“On top of it, political uncertainty caused by the arrest of opposition leader caused ripples that resulted in the index losing 1,056 points during the session,” it said.

Cement, oil and gas marketing, refinery and banking sectors faced heavy selling pressure.

Technology stocks topped the volumes with trading in 59.7 million shares, followed by oil and gas marketing companies (54.6 million) and power companies (38.4 million).

Individually stocks that contributed positively to the index included TRG Pakistan (+6 points), EFU General Insurance (+3 points), Millat Tractors (+2 points) and Service Industries (+1 point).

Stocks that contributed negatively were HBL (-79 points), Mari Petroleum (-47 points), Bank AL Habib (-44 points), Engro Corporation (-37 points) and Hubco (-35 points).

JS Global analyst Maaz Mulla said panic among investors pushed the market to intraday low of -1,056 points and it eventually closed at 40,741, down 2.3%.

“The National Accountability Bureau (NAB) arrested PML-N President Shehbaz Sharif from the Lahore High Court (LHC) after his bail was rejected in the money laundering case,” he stated.

Trading volumes stood at 407 million shares. Hascol Petroleum (-6.4%), Unity Foods (-2.8%), K-Electric (-0.2%) and TRG Pakistan (+1.1%) were the volume leaders, contributing a cumulative 134 million shares to the volumes.

Selling pressure was witnessed in the banking and cement sectors where HBL (-3.6%), UBL (-2.5%), Bank AL Habib (-4.1%), Meezan Bank (-1.8%), MCB (-1.4%), Kohat Cement (-7.5%), Maple Leaf Cement (-6.7%), Pioneer Cement (-6.1%), DG Khan Cement (-4.9%) and Cherat Cement (-4%) were the major losers.

Moreover, Oil and Gas Development Company (OGDC) in the exploration and production sector closed flat as it declared its FY20 result. The company posted earnings per share of Rs23.27 with cash payout of Rs2.50 per share, he added.

“Going forward, we expect the market to remain under pressure and we recommend investors to wait for further buying in cement, steel and refinery sectors,” the analyst said.

Overall, trading volumes dropped to 407.2 million shares compared with Friday’s tally of 435 million. The value of shares traded during the day was Rs14.3 billion.

Shares of 418 companies were traded. At the end of the day, 57 stocks closed higher, 351 declined and 10 remained unchanged.

Hascol Petroleum was the volume leader with 48.7 million shares, losing Rs1.41 to close at Rs20.50. It was followed by TRG Pakistan with 34.5 million shares, gaining Rs0.59 to close at Rs53.03 and K-Electric with 30.2 million shares, losing Rs0.01 to close at Rs4.21.

Foreign institutional investors were net sellers of Rs208.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.