Stocks plunge amid growing political turmoil

KARACHI:

Pakistan Stock Exchange (PSX) experienced a dramatic plunge of more than 1,700 points on Friday as political uncertainty over the Supreme Court’s (SC) verdict on elections for reserved seats, which limited the government’s constitutional powers, dampened investor interest.

In the morning, trading began on a positive note with the KSE-100 index touching its intra-day high of 81,939.83 points. However, the early optimism quickly dissipated as the market fell sharply and remained under pressure for most of the day.

Factors such as over-leveraged positions, institutional profit-taking in overbought stocks and concerns over economic uncertainty amid political turmoil played a significant role in fueling the bearish trend.

As a result, the index fell below the 81,000 mark and reached its intra-day low of 79,812.69 points. The KSE-100 index eventually closed just above the 80,000 mark with significant losses.

“Stocks closed sharply lower on rising political uncertainty amid concerns over the outcome of SC’s reserved seat verdict, which limited the government’s constitutional powers,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Over-leveraging, institutional profit-taking in overbought shares and concerns over economic uncertainty amid political noise played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded a plunge of 1,721.97 points, or 2.1%, and settled at 80,117.89.

Topline Securities, in its report, said the KSE-100 index largely remained under pressure, which could be attributed to political noise as the government indicated its resistance to the Supreme Court order in favour of Pakistan Tehreek-e-Insaf’s (PTI) claim on reserved seats in assemblies.

Major contribution to the index’s decline came from Hub Power, Fauji Fertiliser, Habib Bank Limited, Pakistan Petroleum and United Bank, as they cumulatively weighed down the index by 717 points, Topline added.

Arif Habib Limited (AHL), in its report, commented “heavy selling at the end of the week eroded earlier gains and the market closed flat for the week at 80,117”.

Some 17 shares rose while 83 fell with Sui Northern Gas Pipelines Limited (+3.63%), Thal Limited (+2.62%) and Mari Petroleum (+0.57%) being the biggest upside contributors while Hub Power (-4.37%), Fauji Fertiliser (-4.73%) and Habib Bank (-4.35%) were the largest drags, it said.

Decline was seen following reluctance from the Election Commission to implement a Supreme Court verdict that awarded 24 reserved seats to the PTI, AHL added.

JS Global analyst Mubashir Anis Naviwala noted that the stock market saw a positive opening for the day, however, bears soon took charge of the trading floor as investors became jittery over uncertainty on the political front.

“Moving forward, we advise investors to adopt a cautious stance,” the analyst added.

Overall trading volumes increased to 479 million shares compared with Thursday’s tally of 470.3 million. The value of shares traded during the day was Rs27.85 billion.

Shares of 446 companies were traded. Of these, 91 stocks closed higher, 305 fell and 50 remained unchanged.

Waves Home Appliances was the volume leader with trading in 36.9 million shares, gaining Rs0.03 to close at Rs10.07. It was followed by Fauji Fertiliser Bin Qasim with 30.7 million shares, losing Rs0.99 to close at Rs41.03 and Pak Elektron with 24.8 million shares, losing Rs2.27 to close at Rs26.38.

Foreign investors were net buyers of shares worth Rs1.42 billion, according to the NCCPL.