Market watch: Stocks dive on change in monetary policy

Benchmark KSE-100 index sheds 519.36 points to settle at 46,008.85

KARACHI:

The Pakistan Stock Exchange continued its southward journey on Tuesday as the benchmark KSE-100 index dived 519 points owing to pessimism about the hike in policy rate by the State Bank of Pakistan (SBP).

The market had largely anticipated the central bank to maintain status quo in the monetary policy and the hike of 25 basis points shattered investor confidence.

Weak sentiment sparked profit-taking in heavyweight sectors including automobile, fertiliser, cement and oil. Refineries fared no better and sell-off continued for one more day, which pushed the entire sector in the red.

Following a brief open in the positive region, the KSE-100 index traded flat for most part of the day owing to a lack of positive triggers. Panic selling emerged later and the index recorded a steep decline, closing near the 46,000-point barrier.

At close, the benchmark KSE-100 index recorded a decrease of 519.36 points, or 1.12%, to settle at 46,008.85.

In its report, Arif Habib Limited stated that the market posted an increase of 305 points earlier in the session, however, it lost the gains and shed a total of 1,055 points, including the erosion of 305 points gained earlier.

Towards the end of the day, the market saw a steep decline with the index closing down by 519 points. Selling was witnessed across the board, with heavy impact on technology and cement sectors.

Despite low leverage levels in the market, the KSE-100 index plunged due to redemption calls at mutual funds.

Regardless of the steep fall in the KSE-100 index, the overall trading volumes remained low compared to the heydays seen in the previous fiscal year, the report said.

JS Global analyst Maaz Mulla said that a rollercoaster ride was seen in the trading session, where the index touched intra-day high and low of +305 points and -750 points respectively.

Pressure was witnessed in the cement sector on the back of policy rate hike, where Flying Cement (-6.9%), Dewan Cement (-5.3%), Pioneer Cement (-4.4%), Kohat Cement (-4.6%), Maple Leaf Cement (-3.4%) and DG Khan Cement (-3.5%) were the major losers.

The refinery sector also took a battering, where Attock Refinery (-5.6%), National Refinery (-2.8%), Pakistan Refinery (-4.7%) and Byco Petroleum (-3%) lost ground.

The technology sector followed the trend where Systems Limited (-3.5%), NetSol Technologies (-2.8%), Avanceon Limited (-3%) and TRG Pakistan (-1.2%) closed in the red.

 “Going forward, we recommend investors to remain cautious at current levels and wait for fresh buying,” the analyst said.

Overall trading volumes increased to 325.9 million shares compared with Monday’s tally of 194.7 million. The value of shares traded during the day was Rs12.3 billion.

Shares of 519 companies were traded. At the end of the day, 103 stocks closed higher, 398 declined and 18 remained unchanged.

Telecard Limited was the volume leader with 28.1 million shares, gaining Rs0.05 to close at Rs22.06. It was followed by WorldCall Telecom with 26.4 million shares, losing Rs0.08 to close at Rs3.11 and TPL Corp with 21.4 million shares, gaining Rs0.65 to close at Rs24.98.

Foreign institutional investors were net sellers of Rs127.06 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.