PSX marks record one-day slump

KARACHI:

In a turbulent session at the Pakistan Stock Exchange (PSX), the KSE-100 index registered its largest-ever single-day drop as it plummeted 3,506 points, or 3.57%, due to rising political instability concerns among investors.

Analysts attributed the political instability to the ongoing protests being held by the Pakistan Tehreek-e-Insaf (PTI), compounded by weakening investor sentiment and foreign fund outflows.

Despite a strong performance by the banking sector, spurred by the State Bank of Pakistan's (SBP) withdrawal of the minimum deposit rate requirement for conventional banks, panic selling led to widespread losses across most of the sectors.

The trading session saw that the index after remaining almost flat earlier in the day rose to the intra-day high of 99,819.59 points before midday. Soon after, the index started declining rapidly and slumped to the intra-day low at 94,180.59 just before the close of trading.

Analysts pointed out that the market was testing critical support levels and upcoming sessions would be the key to determining whether the index would recover or require a prolonged cooling-off period.

In his analysis, Ahsan Mehanti of Arif Habib Corp commented that panic selling was witnessed at the PSX amid political turmoil, after prolonged PTI protests in Islamabad.

He noted that the banking sector outperformed the market, based on the SBP's decision to drop the minimum profit rate requirement for deposits of financial institutions, public sector enterprises and public limited companies.

However, he added, political uncertainty, foreign fund outflows and selling pressure owing to the rollover of future contracts played the role of catalysts in the record bearish activity at the PSX.

At the end of trading, the benchmark KSE-100 index recorded a plunge of 3,505.62 points, or 3.57%, to 94,574.16.

Topline Securities cited in its market review that the KSE-100 index witnessed its largest-ever single-day decline, dropping 3,506 points (-3.57%). "This steep fall was driven by political uncertainty stemming from PTI's march towards the capital, shaking investor confidence," it said.

The report pointed out that the index swung between the low of -3,899 points and high of +1,739 points. The removal of minimum deposit rate for conventional banks in the case of companies, alongside the SBP's directive to the Islamic banks to pay at least 75% of the weighted average gross yield on rupee savings of individuals, further unsettled the market.

Meezan Bank, Faysal Bank and BankIslami hit their lower price locks (-10%). Negative contribution also came from Fauji Fertiliser Company, Oil and Gas Development Company, Pakistan Petroleum Limited and Hub Power, Topline added.

In its report, Arif Habib Limited (AHL) stated that an overstretched market saw a -5.6% swing in intra-day trading from the high of 99,819.

Some 87 shares fell and 13 rose with Habib Bank Limited (+4.98%), Habib Metropolitan Bank (+6.79%) and Bank AL Habib (+1.78%) being the biggest contributors to the index gains.

It said that following the SBP's removal of minimum deposit rate for conventional banks, the National Bank of Pakistan (+2.98%), The Bank of Punjab (+0.59%) and Askari Bank (+1.49%), which had the largest corporate deposits, emerged as the biggest beneficiaries.

However, stocks of Islamic banks were sold off, which included Meezan Bank (-10%), BankIslami (-10%) and Faysal Bank (-10%).

AHL added that the KSE-100 was testing support at 94,000 points and coming sessions would determine whether its rally would breach the 100,000 mark or a longer cooling-off period would persist.

JS Global analyst Mubashir Anis Naviwala wrote that political uncertainty triggered a correction of 3,900 points during intra-day trading.

After peaking at the intra-day high of 99,819 points, widespread panic selling enveloped all sectors, except for conventional banks, he said, adding that moving forward, investors should adopt a cautious stance.

Overall trading volumes increased to 1.1 billion shares against Monday's tally of 640.3 million. The value of shares traded during the day was Rs43.3 billion.

Shares of 456 companies were traded. Of these, 53 stocks closed higher, 355 fell and 48 remained unchanged.

K-Electric was the volume leader with trading in 101.6 million shares, declining Rs0.54 to close at Rs4.65. It was followed by The Bank of Punjab with trading in 92 million shares, gaining Rs0.04 to close at Rs6.85 and Hascol Petroleum with 73.3 million shares, gaining Rs1.24 to close at Rs13.59.

During the day, foreign investors bought shares worth Rs584 million, according to the NCCPL.