The stock market came under extensive selling pressure on Friday as investors trimmed their holdings in heavyweight stocks following record-breaking sessions in recent weeks.
The benchmark KSE-100 index shed 1,701.56 points, or 1.09%, to settle at 154,439.68. The hefty correction came following profit-taking a day ago, when the index lost 880 points.
Earlier, the bourse hit a series of record highs, during which it crossed the unprecedented 157,000-point mark, providing handsome returns to investors.
Analysts attributed Friday's decline to the high cost of leverage and concerns sparked by the impact of heavy rains and widespread floods on the economy, particularly the agriculture sector.
Market movement showed that in the morning the KSE-100 spiked to the intra-day high of 156,519 points, but it quickly lost momentum and took a deep dive. Following midday break, the market fell further and touched the intra-day low of 154,360 towards the close of trading.
In its market review, Topline Securities said that correction was observed at the stock exchange due to the rising cost of leverage (margin trading system and futures market) as the KSE-100 index declined 1.09% to close at 154,440.
Major negative contribution to the index came from United Bank Ltd, Fauji Fertiliser Company, Engro Holdings, Hub Power and Lucky Cement, which erased a cumulative 900 points, it said.
In terms of traded value, the National Bank of Pakistan (Rs2.28 billion), Pakistan Petroleum Ltd (Rs1.12 billion), Hub Power (Rs1.08 billion), Pakistan State Oil (Rs912 million) and Maple Leaf Cement (Rs867 million) dominated the trading activity, Topline added.
JS Global analyst Mubashir Anis Naviwala commented that selling pressure persisted at the bourse, with the KSE-100 losing 1,702 points. The market closed at 154,440, representing one of the steepest single-day declines in recent weeks.
Pressure was most evident in index heavyweights including bank, cement and exploration & production (E&P) stocks. Total traded volumes stood at 988 million shares, led by First National Equities, Agha Steel Industries, Pervez Ahmed Consultancy, Fauji Foods and The Bank of Punjab. "We advise investors to maintain a cautious stance, focusing on capital preservation and risk management," the analyst said.
Arif Habib Limited (AHL) reported that a follow-through decline reduced week-on-week gains to 0.12% for the KSE-100 index.
On Friday, 29 shares rose while 70 fell, where the National Bank of Pakistan (+2.59%), Kohinoor Textile Mills (+7.88%) and Bank AL Habib (+0.5%) contributed the most to the index gains. On the other side, UBL (-2.42%), Engro Holdings (-2.48%) and Fauji Fertiliser Company (-1.09%) were the biggest drags, it said.
AHL mentioned that an International Monetary Fund (IMF) mission was scheduled to visit Pakistan on September 25 for the second review talks under the $7 billion Extended Fund Facility.
"In the wake of devastating floods, the macroeconomic framework may have to be revised downwards or re-adjusted, including the real GDP growth rate, Consumer Price Index-based inflation, monetary policy, exports, imports and tax revenues for the current fiscal year," it said.
"The KSE-100 continues to decline into support at 154k and should set up a recovery in the coming week once it signals a bullish order flow," AHL added.
Overall trading volumes were recorded at 987.6 million shares compared with the previous session's tally of 1.3 billion. The value of shares traded was Rs39.9 billion.
Shares of 476 companies were traded. Of these, 180 stocks closed higher, 263 fell and 33 remained unchanged.
First National Equities was the volume leader with trading in 62 million shares, gaining Rs0.31 to close at Rs9.95. It was followed by Agha Steel Industries with 61.3 million shares, rising Rs0.16 to close at Rs9.93 and Pervez Ahmed Consultancy with 47.2 million shares, up Rs0.38 to close at Rs3.17. Foreign investors bought shares worth Rs282.5 million, the National Clearing Company reported.
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