Market watch: KSE-100 takes another battering

Benchmark index nosedives 911.92 points to settle at 42,779.76

KARACHI:

The Pakistan Stock Exchange on Thursday experienced another round of battering as it nosedived 912 points on the back of looming uncertainty about taxes and an unstable political situation.

With the latest drop, the bourse has lost over 3,000 points since the start of the ongoing week.

Keeping in view the Senate chairman election on Friday and in order to avoid the impact of an upset similar to the one experienced last week, investors chose to dispose of their stockholdings.

Rising Covid cases once again triggered fears of stringent measures by the government, which could bring the economy to a standstill and sparked selloff at the stock market.

Automobile, refinery and oil sectors took a hit in the wake of weak investor sentiment and closed entirely in the red. In addition, cement, fertiliser and financial sectors also reported substantial losses and closed the session on a negative note.

Following a brief open in the positive zone, the KSE-100 index resumed its downtrend within the first hour. Towards noon, the market erased the losses and recorded gains, however, shattered investor spirits sparked panic selling and the market dived later in the day.

At close, the benchmark KSE-100 index recorded a decrease of 911.92 points, or 2.09%, to settle at 42,779.76 points.

Arif Habib Limited, in its report, stated that the market saw another thrashing of 1,003 points after posting an increase of 199 points during the day.

Selling pressure kept on building by the end of the session, during which several stocks hit their lower circuits. However, periodic buying contained the losses to -912 points by the close of trading.

The cement sector saw buying activity, whereas banking, exploration and production, power, oil and gas marketing sectors contributed to most of the decline in the KSE-100 index.

Though the Federal Board of Revenue (FBR) gave clarification about the upcoming withdrawal of tax exemptions, the investors were perturbed by the anticipated levy of additional taxes. Leveraged investors closed their positions at market rates rather than meeting the margin requirements.

In addition, Friday’s Senate chairman and deputy chairman elections also had a bearing on the market, where investors preferred to stay away than bearing the brunt of any surprise as witnessed in the previous week, the report said.

JS Global analyst Maaz Mulla said yet another bloodbath was witnessed at the stock exchange with the KSE-100 index closing down 912 points at 42,779.

Political uncertainty due to Senate chairman election and fears of any potential measures that might be taken due to the recent increase in Covid cases weakened investor sentiment.

Traded volume stood at 406 million shares. Unity Foods (-7.5%), TRG Pakistan (-7.5%) and Hum Network (-6.3%) were the volume leaders, contributing more than 83 million shares, or 20%, to the total market volume.

Oil and Gas Development Company (-4.3%), HBL (-2%), Lucky Cement (-1.7%), Engro (-1.5%), Hubco (-1.8%), TRG Pakistan (-7.5%) and Searle (-4.8%) were among the major laggards that dragged the index down by 349 points.

Technology and refinery sectors faced heavy selling pressure where NetSol (-7.5%), Avanceon (-7.5%), Attock Refinery (-7.5%), Pakistan Refinery (-7.5%) and National Refinery (-6.6%) lost ground.

“Moving forward, we expect bearish sentiment to persist in the market on the back of political uncertainty and potential redemptions by mutual funds. Hence, we recommend investors to remain cautious,” the analyst added.

Overall trading volumes rose to 406.1 million shares compared with Wednesday’s tally of 363.2 million. The value of shares traded during the day was Rs17.7 billion.

Shares of 408 companies were traded. At the end of the day, 47 stocks closed higher, 351 declined and 10 remained unchanged.

Unity Foods was the volume leader with 34.9 million shares, losing Rs2.04 to close at Rs25.29. It was followed by TRG Pakistan with 27.1 million shares, losing Rs9.75 to close at Rs120.33 and Hum Network with 21.5 million shares, losing Rs0.39 to close at Rs5.76.