Market watch: Heavy foreign selling pulls stocks down

Benchmark KSE-100 index dips 257.67 points to settle at 45,072.38

KARACHI:

The Pakistan Stock Exchange experienced on Tuesday a tumultuous session as the benchmark KSE-100 index succumbed to selling pressure ahead of Morgan Stanley Capital International’s (MSCI) reclassification of Pakistan bourse, which was being shifted to the Frontier Markets Index.

In line with global equity markets, Pakistan exchange remained under pressure as bulls and bears were seen locking horns throughout the day with foreign investors being heavy sellers.

Moreover, scepticism about the resumption of International Monetary Fund (IMF) loan programme amid continued rupee depreciation shook investor confidence.

Earlier, trading began with a spike and the KSE-100 index inched closer to the 46,000-point mark. However, the rally subsided soon afterwards as investors resorted to cherry-picking of stocks.

From that point onwards, volatility persisted throughout the day, keeping the index under pressure. A buying spree, emerging towards the end, wiped off some of the losses.

At close, the benchmark KSE-100 index recorded a decline of 257.67 points, or 0.57%, to settle at 45,072.38.

A report of Arif Habib Limited stated that on the MSCI rebalancing day, the KSE-100 index had a volatile session as it made a dicey move of more than 1,000 points, closing the day above 45,000 points.

The exploration and production sector was in the limelight following news that the government was considering reducing the circular debt by declaring dividends for the shareholders of energy sector companies.

In the last two trading hours, institutional investors accumulated stocks across the board as it was the last opportunity to catch the foreign selling spree due to transition of Pakistan’s bourse from emerging to frontier markets. Main board stocks registered hefty trading volumes.

Sectors contributing to the performance included commercial banks (-160 points), fertiliser (-78 points), investment banks (-18 points), fast moving consumer goods (-16 points) and textile composite (-13 points).

JS Global analyst Waqar Iqbal said that foreign flows were the talk of the town in Tuesday’ session where MSCI-related stocks were the most prominent. Healthy activity from foreigners as well as locals was witnessed.

Total traded volumes were 412 million shares where the top five contributors were Habib Bank Limited, MCB Bank, United Bank Limited, TRG Pakistan and Hub Power Company.

“Going forward, details of realisation of the Saudi Arabian package and IMF agreement will decide the market’s direction,” the analyst said.

Overall trading volumes increased to 411.5 million shares compared with Monday’s tally of 268.2 million. The value of shares traded during the day was Rs34.8 billion.

Shares of 345 companies were traded. At the end of the day, 125 stocks closed higher, 198 declined and 22 remained unchanged.

Habib Bank was the volume leader with 31.5 million shares, losing Rs1.81 to close at Rs123.35. It was followed by First National Equities with 22.3 million shares, losing Rs0.23 to close at Rs10.76 and United Bank with 20.8 million shares, losing Rs2.45 to close at Rs141.25.

Foreign institutional investors were net sellers of Rs10.2 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.