Market watch: KSE-100 plummets over fear of US sanctions

Benchmark index falls 908.19 points to close at 44,366.74

KARACHI:

The Pakistan Stock Exchange took a hammering on Wednesday and the benchmark KSE-100 index dived over 1,200 points in intra-day trading as the threat of US sanctions shattered investor confidence.

On Tuesday, a group of high-profile US senators moved a bill in the US Senate, seeking imposition of sanctions on the Afghan Taliban that could also be potentially extended to Pakistan.

Besides, there was no respite for the falling rupee as it crossed the Rs170 mark against the dollar in the inter-bank market and traded at around Rs172 in the open market.

Index-heavy automobile, bank, fertiliser, cement and oil sectors took a battering and most of them closed entirely in the red.

Following a brief open in the positive zone, the KSE-100 index began its descent and fell below the 44,000-point mark by midday. At that point, investors cherry-picked stocks, which helped erase some of the losses.

At close, the benchmark KSE-100 index recorded a decrease of 908.19 points, or 2.01%, to settle at 44,366.74 points.

Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the dip was driven by geopolitical concerns and the threat of US sanctions on Pakistan.

Federal ministers of Pakistan condemned the bill, which circulated in the US Senate on Tuesday, he said, adding that the fall in rupee’s value had little to no impact on the direction of the market.

Echoing his views, Alpha Beta Core CEO Khurram Schehzad stated that geopolitical concerns, particularly at a time when the International Monetary Fund (IMF) was due to review Pakistan’s economy, hammered the KSE-100 index and dragged it down.

He pointed out that US statements had the potential to influence direction of the market as well as impact the upcoming IMF review of Pakistan for the release of sixth loan tranche.

“In addition, investors’ panic over the drop in rupee’s value against the US dollar was also reflected in the plunge in the stock market,” he said.

A report of Arif Habib Limited stated that after initial uptick of 67 points, which carried the positive sentiment from Tuesday, the market took a dive due to foreign policy concerns as US senators sought to slap sanctions on Taliban and its supporters.

Investors were worried about the fate of Pakistan’s relations with the US, it said. Resultantly, the KSE-100 index tumbled 1,300 points during the session and closed down by 908 points.

Selling was observed across the board with major decline in technology, bank, exploration and production, oil and gas marketing companies and fertiliser sectors, the report said.

JS Global analyst Maaz Mulla said that the KSE-100 index lost 908 points and closed the session at 44,367 points. Panic selling continued across the board on the back of geopolitical and economic concerns, he said.

However, the market sustained the 44,000 level as it rebounded from the intra-day low of 43,975 points.

“Going forward, we recommend investors to adopt a buy-on-dip strategy in banking, steel and textile sectors,” the analyst said.

Overall trading volumes increased to 468.8 million shares compared with Tuesday’s tally of 364.9 million. The value of shares traded during the day was Rs16.4 billion.

Shares of 560 companies were traded. At the end of the day, 60 stocks closed higher, 489 declined and 11 remained unchanged.

Telecard Limited was the volume leader with 52.4 million shares, losing Rs0.05 to close at Rs17.33. It was followed by WorldCall Telecom with 51.2 million shares, losing Rs0.2 to close at Rs2.71 and Dolmen City with 36 million shares, losing Rs0.18 to close at Rs12.04.

Foreign institutional investors were net sellers of Rs39 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.