Market watch: Institutional selling wipes over 400 points off index

Stocks trade deep in the red as KSE-100 index plunges 1.6%.

KARACHI: The stock market tumbled on the first day of the week, pulling the KSE 100-share index down by more than 400 points or 1.6% on institutional selling.

At the close, the Karachi Stock Exchange’s (KSE) benchmark 100-share index stood lower by 1.67% or 426.57 points to end at 26,255.21 on Monday.

“Stocks opened positive, however, it did not take longer before trading deep in the red and by midday selling accelerated as the index tested 26,000 levels, down as much as 600 points or 2.3%,” said Faisal Bilwani of Elixir Securities.

“Interestingly, index-heavy illiquid stocks did the first damage with the broader market following suit. However, reports of buying by local banks and support at 26,100 helped reduce losses for the day,” he said.



Ovais Ahsan of JS Global Securities said the market was driven down initially by the cement sector as investors feared that the removal of electricity subsidies would create a rift in the cartel as passing on additional cost would remain a divisive issue among producers with captive power plants and those without.

He said a meeting between the International Monetary Fund (IMF) and the government to discuss stipulated targets and the release of next loan tranche was the source of the news that the IMF had advised the government to quickly remove power subsidies.

DG Khan Cement (-4.4%), the second largest producer of building materials, was the major loser in the sector.

The bears kept a powerful stranglehold as worries over the Securities and Exchange Commission of Pakistan’s directive to the KSE to share probe findings on alleged misuse of trading data also created negativity.

“Technical gurus continued to predict more doom with a consensus view of a 2,000 points’ decline. The trend though will be set by what foreign portfolio investors do as continuous inflow will boost the market quickly and give the bulls an adrenaline shot,” Ahsan said.



Trade volumes remained the same at 287 million shares compared with Friday’s tally.

Shares of 398 companies were traded. At the end of the day, 56 stocks closed higher, 326 declined and 16 remained unchanged. The value of shares traded during the day was Rs8.4 billion.

Jahangir Siddiqui and Company was the volume leader with 42.3 million shares, gaining Rs0.54 to finish at Rs13.63. It was followed by Fauji Cement with 13.6 million shares, losing Rs0.46 to close at Rs15.93 and Engro Fertilizer with 12.8 million shares, gaining Rs0.19 to close at Rs49.28.

Foreign institutional investors were net sellers of Rs45 million worth of shares, according to data compiled by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, February 11^th, 2014.

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