Market watch: Rupee fall drives downturn in KSE-100

Benchmark index sheds 379.12 points to settle at 46,891.34

KARACHI:

The Pakistan Stock Exchange turned bearish on Tuesday and the KSE-100 index lost 379 points, driven by a further fall in the value of the rupee to an all-time low of Rs168.94 against the US dollar.

Investor sentiment was dampened by the currency’s decline as it signaled an increase in import payments, freight cost and inflation in the coming months.

The refinery sector received a battering owing to uncertainty about the refinery policy, which drew criticism in a meeting of the Cabinet Committee on Energy on Monday.

In addition to that, market participants expected the central bank to shift away from the status quo in the monetary policy announcement next week. A lack of clarity about the central bank’s position also contributed to the bearish pressure.

Earlier, trading began with minor ups and downs and selling pressure became visible soon afterwards. The KSE-100 index fell steadily but the decline accelerated later in the day. Cherry-picking by investors in the closing minutes helped erase some of the losses.

At close, the benchmark KSE-100 index recorded a decrease of 379.12 points, or 0.8%, to settle at 46,891.34.

A report of Arif Habib Limited stated that the market tumbled mainly as a result of redemptions by mutual funds.

On the other hand, negative news triggers in the wake of the fall in rupee’s parity with the dollar, US state secretary’s hint at revisiting US-Pakistan relations and the pending International Monetary Fund (IMF) review had a bearing on the KSE-100 index.

 

Selling was noted across the board with technology, exploration and production, cement and steel sectors leading the downside in the index.

Financial results announced during the day also failed to impress the investors.

The refinery sector faced an onslaught with failure to approve the refinery policy as reported in newspapers, the report stated.

JS Global analyst Maaz Mulla said that the KSE-100 index lost 379 points to close at 46,891. Trading activity was mainly witnessed in sideboard stocks.

The refinery sector came under immense pressure as the Cabinet Committee on Energy was said to have not approved incentives for the refineries. Consequently, Attock Refinery (-7.1%), National Refinery (-6.2%), Byco (-7.3%) and Pakistan Refinery (-5.5%) closed in the red zone.

On the other hand, the steel sector witnessed a similar sentiment where Aisha Steel Mills (-5.8%), Amreli Steels (-3.7%), International Industries (-2.6%), Mughal Iron and Steel Industries (-2.2%) and International Steels (-2.3%) lost ground and closed in the negative region.

DG Khan Cement (-3.7%) in the cement sector announced financial results for FY21 with a 10% final cash dividend and earnings per share of Rs8.96.

 “Going forward, we recommend investors to remain cautious and wait for significant dips for further buying,” the analyst said.

Overall trading volumes increased to 479.8 million shares compared with Monday’s tally of 395.8 million. The value of shares traded during the day was Rs15 billion.

Shares of 525 companies were traded. At the end of the day, 102 stocks closed higher, 411 declined and 12 remained unchanged.

Byco Petroleum was the volume leader with 71.7 million shares, losing Rs0.71 to close at Rs9.08. It was followed by Telecard Limited with 51.4 million shares, gaining Rs0.48 to close at Rs24.36 and WorldCall Telecom with 25.4 million shares, losing Rs0.1 to close at Rs3.2.

Foreign institutional investors were net sellers of Rs173.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.