Market watch: KSE-100 extends losses over MSCI uncertainty

Benchmark index loses 188.56 points to settle at 46,729.96

KARACHI:

The Pakistan Stock Exchange extended its decline for an additional session on Tuesday as investor mood remained sombre ahead of Morgan Stanley Capital International’s (MSCI) decision on possible downgrade of Pakistan from Emerging Markets to Frontier Markets.

The KSE-100 index fell 189 points as market participants booked profit to safeguard their investment in case of a surprise MSCI verdict. Resultantly, all index heavyweights including oil, automobile and cement sectors faced hefty selling.

The rupee fared no better during the session and lost further ground, which dimmed investor hopes.

Earlier, trading kicked off with minor fluctuations, however, low investor spirits sparked a sell-off and dragged the market down. A buying spree, emerging towards the end, erased some of the losses.

At close, the benchmark KSE-100 index recorded a decrease of 188.56 points, or 0.4%, to settle at 46,729.96.

A report of Arif Habib Limited stated that just before an important MSCI decision on the reclassification of Pakistan, which may be pushed from the Emerging Markets Index to the Frontier Markets Index, the KSE-100 index lost 300 points during the day and closed down by 189 points.

Vibes were negative due to continuous selling from foreign counters in cement and banking sectors due to the upcoming MSCI reclassification and the depreciating rupee against the US dollar, which made holding local stocks a costly affair.

Local investors were lately absorbing negative foreign flows in a gradual and cautious manner, the report said.

JS Global analyst Maaz Mulla said that trading started on a bearish note as the benchmark KSE-100 index sank to intra-day low of -301 points.

At midday, bulls made an attempt to take over the proceedings by lifting the index to intra-day high of +76 points. However, the bourse closed on a negative note with a drop of 189 points at 46,730.

The downward trend for cement and steel stocks continued, among which Cherat Cement (-1.6%), Maple Leaf Cement (-1.9%), DG Khan Cement (-2.1%), Lucky Cement (-1.8%), Aisha Steel Mills (-3%), Amreli Steels (-2.5%), Agha Steel Industries (-1.2%) and International Steels (-1.2%) were the major losers.

Moreover, Pakistan Petroleum (-0.6%), Oil and Gas Development Company (-1%) and Pakistan Oilfields (-1.1%) from the exploration and production sector lost ground as crude oil prices fell in the international market.

“Going forward, we recommend investors to remain cautious and wait for clarity on the MSCI reclassification proposal, which is scheduled to be announced after market hours on Tuesday,” the analyst said.

Overall trading volumes rose to 423.8 million shares compared with Monday’s tally of 417.9 million. The value of shares traded during the day was Rs11.3 billion.

Shares of 520 companies were traded. At the end of the day, 129 stocks closed higher, 373 declined and 18 remained unchanged.

TPL Corp was the volume leader with 41.8 million shares, gaining Rs0.68 to close at Rs25.28. It was followed by Kohinoor Spinning with 33.7 million shares, losing Rs0.07 to close at Rs6.81 and PIA (A) with 29.8 million shares, gaining Rs0.37 to close at Rs5.87.

Foreign institutional investors were net sellers of Rs319.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.