Market watch: KSE-100 sinks amid political turmoil

KARACHI:

The Pakistan Stock Exchange (PSX) began another week on a bearish note on Monday, with the benchmark index plunging nearly 1,000 points as the market reacted to repercussions of political uncertainty.

In the backdrop of a worsening political scenario coupled with poor economic data in the wake of rising coronavirus cases, the index fell below the 40,000-point mark.

Political instability following the registration of FIR against former prime minister Nawaz Sharif for conspiring against Pakistan and state institutions and indictment of former president Asif Ali Zardari by an accountability court in the Park Lane and Thatta water supply supplementary references impacted the investment climate.

Inflation rate again jumping above 9% in September, as reported by the Pakistan Bureau of Statistics on Friday, coupled with a gloomy economic outlook aided the bearish sentiment.

Recovery of the rupee against the US dollar, upbeat cement sales data and rise in international oil prices failed to attract market participants, who remained wary of the overall economic situation.

At close, the benchmark KSE-100 index recorded a decrease of 998.36 points, or 2.49%, to settle at 39,072.47 points.

Arif Habib Limited, in its report, stated that the market lost another 1,206 points during the session, particularly before the end of trading.

“Over the weekend, the release of CPI (Consumer Price Index) data hinted at an increase in the policy rate as the negative real interest rate rose post-increase in inflation,” it said, adding, “Political uncertainty, on the other hand, also caused panic amongst investors.”

Gradual redemptions by mutual fund investors resulted in market meltdown. Non-blue chip stocks as well as off-board shares sustained heavy losses as compared to blue chip stocks.

Selling pressure was observed across the board, with major contribution from exploration and production, banking, and oil and gas marketing sectors.

Individually, stocks that contributed positively to the index included Dawood Hercules Corporation (+8 points), Ghani Glass (+4 points), Kohat Cement (+1 point) and Feroze1888 Mills (+1 point).

Stocks that contributed negatively were Hubco (-74 points), Engro Corporation (-56 points), Pakistan Petroleum (-50 points), TRG Pakistan (-36 points) and Colgate-Palmolive (-32 points).

JS Global analyst Danish Ladhani said the benchmark KSE-100 index received a battering, slumping 998 points. It closed at 39,072 after touching a low of -1,206 points.

“The market traded sideways in early hours of the trading session, however, in later hours, selling pressure called off all the bets and the index faced a free fall,” he stated.

“The market remained volatile as fears mounted about the second wave of coronavirus leading to a mini-smart lockdown nationwide,” he said, adding, “Current political unrest added further swing towards the fickleness.”

Gharibwal Cement (-2.9%) announced FY20 earnings per share of Rs0.33 versus loss per share of Rs1.84 in the same period of last year with no cash dividend.

Furthermore, Loads Limited (-7%) in the automobile parts and accessories sector announced FY20 consolidated loss per share of Rs3.81 versus Rs0.35 per share in the same period of last year with no cash payout.

“Going forward, we expect the market to trade sideways due to political uncertainty and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes rose to 409.9 million shares compared with Friday’s tally of 348.6 million. The value of shares traded during the day was Rs12.6 billion.

Shares of 417 companies were traded. At the end of the day, 31 stocks closed higher, 372 declined and 14 remained unchanged.

Hascol Petroleum was the volume leader with 60.4 million shares, losing Rs1.30 to close at Rs16.07. It was followed by Unity Foods with 31.98 million shares, losing Rs1.10 to close at Rs13.98 and K-Electric with 29.2 million shares, losing Rs0.29 to close at Rs3.75.

Foreign institutional investors were net sellers of Rs540.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.