Market watch: KSE-100 recovers 800 points, but still ends down

Benchmark index declines 411.61 points to settle at 45,597.24

KARACHI:

The Pakistan Stock Exchange made a modest recovery on Wednesday as the benchmark KSE-100 index closed with a trimmed loss of 412 points after shedding over 1,200 points in intra-day trading.

At midday, the market took a hammering as the 25-basis-point hike in policy rate by the State Bank of Pakistan to 7.25% dented investor sentiment.

In addition, the market participants expected further monetary tightening as signaled by the central bank in its monetary policy announcement on Monday.

Moreover, the slide in global markets on fears of default by China’s property group Evergrande also contributed to the dip in Pakistan’s market.

The sell-off battered the index-heavy oil, automobile, fertiliser and cement sectors as they closed with hefty losses.

Earlier, trading began on a negative note and the KSE-100 index sank below the 45,000-point barrier by midday. At that point, the investors began cherry-picking stocks that had dropped to attractive valuations and the buying interest helped the market wipe off significant losses.

At close, the benchmark KSE-100 index recorded a decrease of 411.61 points, or 0.89%, to settle at 45,597.24.

Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the prime reason behind the steep decline in the KSE-100 index was the increase in benchmark interest rate.

 “The State Bank of Pakistan has taken a step towards monetary tightening and investor sentiment took a hit because they expect it to deepen further,” he said.

Echoing his views, AA Gold Commodities Director Adnan Agar said that the hike in benchmark interest rate dented the spirit of market participants, which could be gauged from the battering being taken by the KSE-100 index.

Expectations of a further hike in the policy rate took a toll on market sentiment, he said.

 “Besides, global stock markets are on a downtrend for the past two to three days due to the risk of default by China Evergrande Group and uncertainty over the US monetary policy decision due later in the day,” he said. “Both these factors fuelled the sell-off at the local bourse.”

Arif Habib Limited, in its report, stated that the market continued its downtrend and lost a total of 1,221 points during the session. It closed down by 412 points while making a partial recovery.

 “Leveraged positions of retail investors played havoc in the market, which received margin calls after a continuous decline in the index for the past couple of sessions,” it said.

 “Besides, negative news flow relating to a bank employee having implicated in a money laundering case also dented sentiment.”

Technology and refinery sectors got hurt the most, however, selling pressure was also observed in cement, steel, fertiliser, bank, exploration and production sectors, the report said.

Overall trading volumes jumped to 583.7 million shares compared with Tuesday’s tally of 325.9 million. The value of shares traded during the day was Rs17.4 billion.

Shares of 525 companies were traded. At the end of the day, 99 stocks closed higher, 413 declined and 13 remained unchanged.

WorldCall Telecom was the volume leader with 91.1 million shares, losing Rs0.13 to close at Rs2.98. It was followed by Azgard Nine with 36.2 million shares, losing Rs1.61 to close at Rs22.53 and Hum Network with 34.1 million shares, losing Rs0.44 to close at Rs6.25.