Stocks plunge nearly 4,800 points

Redemptions by mutual funds, year-end profit-taking drag market down

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KARACHI:

Pakistan Stock Exchange (PSX) endured yet another day of massive selling on Thursday as it nosedived nearly 4,800 points – the largest single-day drop in the bourse's history.

A highly volatile trading session left investors puzzled, which came after a recent prolonged record-breaking spree. The biggest single-day slump followed Wednesday's record fall of 3,790 points, when investors resorted to heavy profit-taking at significantly higher stock valuations.

The intense selling pressure was fuelled by several domestic factors and was particularly pronounced in sectors like chemical, commercial banks, power generation and refineries. The KSE-100 index moved between the intra-day low of 105,937.37 points and the high of 111,745.03 points.

"The government's move to prevent non-filers from investing in mutual funds or managing investment portfolios with banks has largely disappointed market players, which resulted in this hefty decline," AKD Securities Director Research Awais Ashraf told The Express Tribune.

Besides, some market participants were apprehensive about a potential end to the monetary easing cycle, influenced by the International Monetary Fund's (IMF) inflation forecast and its emphasis on maintaining a tight monetary policy stance, he added.

KTrade Securities attributed the downturn to heightened political uncertainty as well as year-end adjustments.

At the close of trading, the benchmark KSE-100 index recorded a colossal loss of 4,795.32 points, or 4.32%, and settled at 106,274.98.

Arif Habib Corp MD Ahsan Mehanti wrote "the stock market witnessed panic selling on the outlook of a cautious SBP policy easing due to multiple risks."

Besides, weak global crude oil prices and institutional selling of overbought stocks played the role of catalysts in the record bearish activity, he added.

Topline Securities wrote in its commentary that the KSE-100 index experienced an unprecedented collapse, plummeting 5,132 points in a single trading session and marking the steepest point-wise decline in its history.

The sharp sell-off was triggered by significant redemptions by local mutual funds, compounded by year-end profit-taking by institutions, which collectively dragged the market into turmoil.

Mari Petroleum (-10%) extended its losing streak, hitting the lower circuit for the third consecutive session. Persistent concerns over its overvaluation, particularly concerning the near-term fundamentals, fuelled the sell-off, it said.

Leading the downward trajectory were heavyweights such as Mari Petroleum, Hub Power, United Bank, Oil and Gas Development Company and Engro Corporation, which together contributed a staggering 1,556 points to the index's overall decline, Topline added.

"When it rains, it pours; the KSE-100 gave up another -4.32% day-on-day to take the three-day losing streak to -9.2%," Arif Habib Limited (AHL) wrote in its review.

In total, six shares rose while 94 fell with Mari Petroleum (-10%), Hub Power (-8.38%) and United Bank (-4.52%) being the biggest downside contributors.

Indus Motor (+9.07%), Rafhan Maize Products (+3.92%) and AGP Limited (+1.26%) provided the maximum positive support, it said.

A beautiful price action saw the market take out equal lows at 107.5k and beyond. With the completion of five waves down, a convincing short-term counter-trend rally is now poised to materialise, AHL said.

It anticipated counter-trend rallies that were likely to be capped below 111.5k over the coming weeks.

JS Global analyst Muhammad Hasan Ather highlighted that the index extended its sharp decline on Thursday, tumbling 4.3% (4,795 points) to close at 106,275.

The drop followed Wednesday's record-breaking loss of 3,790 points, as selling pressure persisted across major sectors, including chemicals, banks, power and refineries.

Investor sentiment was weighed down by concerns over the government's Tax Laws (Amendment) Bill 2024, which targets non-filers, and stock-specific corrections driven by perceived overvaluation.

WorldCall Telecom, K-Electric, Cnergyico PK and Pak Elektron led the trading volumes for the day. He anticipated that despite the steep losses, the ongoing market correction may offer attractive buying opportunities, underpinned by ample liquidity, declining interest rates, and easing political uncertainty.

Overall trading volumes increased to 1.17 billion shares compared to Wednesday's tally of 1.11 billion.

Shares of 472 companies were traded. Of these, 66 stocks closed higher, 371 fell and 35 remained unchanged.

WorldCall Telecom was the volume leader with trading in 177.7 million shares, losing Rs0.19 to close at Rs1.52. It was followed by K-Electric with trading in 81.9 million shares, losing Rs0.39 to close at Rs5.22 and Cnergyico PK with 68.4 million shares, losing Rs0.7 to close at Rs5.84.

During the day, foreign investors sold shares worth Rs1.40 billion, the National Clearing Company of Pakistan Limited (NCCPL) reported.