Stocks slump in panic selling
Pakistan Stock Exchange (PSX) faced a sharp sell-off on Monday as escalating geopolitical tensions rattled investor confidence and triggered panic selling. Mounting fears of retaliation following the US attack on Iran spurred concerns of supply disruptions, inflationary pressure and a downbeat export outlook.
The benchmark KSE-100 index plunged to the intra-day low of 4,135 points, touching 115,887 before trimming some of the losses and settling at 116,167, a plunge of 3,856 points, or 3.21%. It marked one of the steepest single-day declines in recent months.
Analysts warned of continued volatility over unfolding developments in the Middle East, however, they added that global markets were yet to react, despite the fact that they were facing worst-case scenarios with oil, gold and the US dollar index only rising around 1%, 0.25% and 0.6%, respectively.
According to Ahsan Mehanti of Arif Habib Corp, stocks slumped amid a sell-off in global equities due to escalation in Middle East tensions. Supply disruptions driven by expected retaliation to the US attack on Iran contributed to a weak export outlook and high inflation worries, which played a major role in selling activity at the PSX, he said.
At the end of trading, the benchmark KSE-100 index recorded a sharp decrease of 3,855.77 points, or 3.21%, and settled at 116,167.47.
In its review, Topline Securities commented that the PSX experienced a subdued trading session in line with the cautious mood seen across global markets. The KSE-100 index dropped sharply, falling as much as 4,135 points during intra-day trading, before wiping off some of the losses to settle at 116,167, down 3,856 points.
Investor sentiment was dampened by rising geopolitical tensions, especially the intensifying conflict between Israel and Iran, which led to heightened uncertainty and widespread risk aversion. The nervousness triggered broad-based panic selling, it observed. Topline added that major index-heavy stocks, including Engro Holdings, Pakistan Petroleum, Lucky Cement, OGDC and Mari Petroleum, were among the top laggards, dragging the index down by 1,054 points.
In its commentary, Arif Habib Limited (AHL) stated that the week started with strong selling following escalation in the Middle East over the weekend. Only five shares rose while 93 fell, with Engro Holdings (-5.02%), Pakistan Petroleum (-6.3%) and Lucky Cement (-4.02%) being the biggest drags.
Oil prices were being closely watched where a $5-per-barrel increase was estimated to raise Pakistan's annual import bill by $996 million and add nearly 22 basis points to the headline inflation, AHL noted.
The brokerage house observed that the KSE-100 "is now trading back below 120,000, which will serve as resistance". Equities would react to news flow from the Middle East, however, it should be noted that global markets had not yet reacted to an extreme situation. Oil prices were up less than 1%, gold was only marginally higher by 0.25% while the dollar index was up 0.6%, AHL pointed out. "Any diplomatic resolution this week can see risk assets rally sharply."
JS Global analyst Mubashir Anis Naviwala remarked that the PSX suffered heavy losses amid a sharp sell-off, opening with a steep 2,000-point gap down amid panic selling. The index failed to recover throughout the session, touching the low of 115,887 and eventually closing with a massive loss of 3,856 points at 116,167.
Total traded volume stood at 595 million shares, with top activity in WorldCall Telecom, Sui Southern Gas Company, Pervez Ahmed Consultancy, K-Electric and Kohinoor Spinning Mills, he noted.
The sharp decline reflected heightened fears driven by uncertainty and external pressures. "We advise investors to remain cautious, focusing on risk management and selective accumulation," the analyst added.
Overall trading volumes increased to 595 million shares compared with Friday's tally of 421.6 million. The value of shares traded was Rs23.5 billion. Shares of 468 companies were traded. Of these, 56 stocks closed higher, 386 fell and 26 remained unchanged.
WorldCall Telecom was the volume leader with trading in 53.3 million shares, falling Rs0.10 to close at Rs1.35. It was followed by Sui Southern Gas Company with 36 million shares, losing Rs4.2 to close at Rs38.8 and Pervez Ahmed Consultancy with 24 million shares, dropping Rs0.12 to close at Rs2.72. Foreign investors bought shares worth Rs162 million, the National Clearing Company reported.