Market watch: Stock market stumbles as speculation hits exchange rates

Benchmark KSE-100 index falls 280.08 points.

KARACHI: Shocks in the foreign exchange market resonated in the stock market as the rupee hit dangerous lows during the day before recovering. 

The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 1.21% or 280.08 points to end at the 22,780.82-point level. “The market remained spooked by the spectre of a large foreign institutional investor sell off and a free falling rupee versus the green back.

The market nosedived after initial gains as news of the rupee sliding to Rs110 against the dollar in the interbank market turned sentiment sour,” said Adeel Jafri of JS Global.  “MCB Bank, one of the top holdings of foreign portfolio investors in Pakistan bore the brunt of the bearish spell closing down 1.7%.



Pakistan State Oil (3.1%) saw selling pressure as anticipation of exchange losses hit the oil marketing company hard. Lucky Cement (3.2%) and DG Khan Cement saw some pruning as investors still played the guessing game on when and if the cement cartel would raise prices to pass on cost hiked by the increase in power tariff,” Jafri added.

“Pakistan equities finished lower amid high volatility with KSE-100 trimming losses that hit an intraday low of -2.3%,” said Faisal Bilwani of Elixir Securites. “Sharp declines and a swift rebound was on the back of unprecedented volatility in the foreign exchange market where the rupee hit a new low Rs111 against the dollar in inter-bank market but settled around Rs106.5.

The day kicked off slow and participants kept a close watch on flows mainly from foreigners however macro concerns and rupee slide hit market hard” Bilwani added. Trade volumes rose to 193 million shares compared with Wednesday’s tally of 172 million shares.



Shares of 348 companies were traded on Wednesday. At the end of the day 86 stocks closed higher, 244 declined while 18 remained unchanged. The value of shares traded during the day was Rs7.1 billion. Nimir Industrial Chemicals was the volume leader with 13.7 million shares gaining Rs0.75 to finish at Rs7.93.

It was followed by Bank of Punjab with 11.3 million shares losing Rs0.18 to close at Rs12.3 and PTCL with 9.9 million shares losing Rs0.04 to close at Rs27.27. Foreign institutional investors were net sellers of Rs41 million, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, September 27^th, 2013.

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