The stock market snapped a four-session winning streak on Thursday and dived over 700 points after a host of negative triggers, coupled with worries about monetary policy announcement, sparked across-the-board selling.
Investor sentiment took a hit after the daily tally of Covid-19 cases soared beyond expectations and sparked fears of yet another lockdown, which would be detrimental for the businesses and economy.
Moreover, investors remained cautious ahead of the monetary policy announcement due on Friday. Though the market anticipated a status quo in the benchmark policy rate, the participants still offloaded their holdings in a bid to play safe in case of a surprise change in the rate.
In addition, the investors sold their stockholdings in the wake of a prolonged bull-run at the bourse as a correction was expected sooner or later.
Earlier, trading began on a positive note and the KSE-100 index recorded gains until midday. The decline began in the second half of the session as concerns over the monetary policy announcement weighed on investor mind.
The drop accelerated in final hours, pushing the index below the 45,000-point mark.
At close, the benchmark KSE-100 index recorded a decrease of 726.22 points, or 1.6%, to settle at 44,724.09 points.
In comments to The Express Tribune, Mafa Capital CEO Adnan Agar said that the market dived on the back of profit-booking by investors. “A correction was expected keeping in view the sustained rise of the bourse over the past few sessions,” he said.
Arif Habib Limited, in its report, stated that the market came down by 809 points during the session, after posting an initial increase of 163 points. By the end of session, the index made a small recovery and closed down by 726 points.
Increase in leverage levels during the ongoing week from Rs35 billion (across MTS, MFS and futures) on March 12 to Rs41 billion till Wednesday reignited the overleveraging issue at a time when key economic decisions were pending such as the monetary policy as well as withdrawal of tax exemptions.
Selling was observed across the board, with cement, steel, refinery and tech sectors contributing to the onslaught, the report added.
JS Global analyst Maaz Mulla said bears once again took control of the bourse as the market touched intra-day low of -809 points and closed at 44,724, down 1.6%.
The market came under pressure on the back of talk that the State Bank might increase the policy rate by 50 basis points, he said. Moreover, the spike in coronavirus cases also shook investor confidence.
Selling pressure was witnessed in the technology and refinery sectors, where NetSol (-7.3%), Avanceon (-5.8%), TRG Pakistan (-6.3%), National Refinery (-7.1%), Attock Refinery (-5.6%) and Pakistan Refinery (-6%) lost ground.
“Moving forward, we expect the market to remain volatile ahead of the policy rate decision and recommend investors to view any downside as a buying opportunity in value stocks,” the analyst added.
Overall trading volumes jumped to 554.1 million shares compared with Wednesday’s tally of 510.4 million. The value of shares traded during the day was Rs23.7 billion.
Shares of 407 companies were traded. At the end of the day, 76 stocks closed higher, 307 declined and 24 remained unchanged.
Byco Petroleum was the volume leader with 57.9 million shares, losing Rs0.06 to close at Rs10.04. It was followed by K-Electric with 49.5 million shares, gaining Rs0.02 to close at Rs4.12 and TRG Pakistan with 39.3 million shares, losing Rs9.31 to close at Rs138.59.
Foreign institutional investors were net buyers of Rs440.6 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.
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