Benchmark index dips 345.23 points to settle at 41,828.91
Investor sentiment turned sour on Tuesday as a bear-run in global equities took a toll on the Pakistan Stock Exchange and pulled the benchmark KSE-100 index down by 345 points amid choppy trading.
Asian shares were broadly weaker as possible delay in expanded US stimulus and concern about fresh pandemic-related lockdowns in Europe dented the recent positive sentiment towards global equity markets.
On Monday, rising concern over a second wave of coronavirus in Europe battered stock markets and caused the region’s biggest wipeout since June, driving investors back to government bonds.
Global oil prices also declined on Monday due to which both oil sectors in Pakistan’s stock market closed entirely in the red on Tuesday.
Banking stocks received a hammering as the State Bank of Pakistan maintained status quo in the monetary policy announcement coupled with FinCEN allegations of illicit fund movements by major banks in Pakistan.
Though the monetary policy decision was broadly in line with market expectations, still banking sector stocks bore the brunt of the impact.
The spillover effect of bearish global markets caused the KSE-100 index to sink over 500 points in initial trading. After midday, investors began cherry-picking stocks, which erased some of the losses. Nevertheless, the index failed to sustain the 42,000-point mark and closed in the red.
At close, the benchmark KSE-100 index recorded a decrease of 345.23 points, or 0.82%, to settle at 41,828.91 points.
Arif Habib Limited, in its report, stated that the market lost a total of 502 points during the day and closed down by 345 points. “Selling pressure was across the board, post-issuance of monetary policy, in which the policy rate was kept constant at 7%,” it said.
Negativity in international and regional stock markets seeped into Pakistan equities as well, though reasons were apparently different.
The banking sector triggered most of the decline in the index, primarily due to the status quo in policy rate, which did not come in line with recent stock buying in the sector.
Mainboard stocks relatively underperformed whereas small-caps such as Aisha Steel Mills, Shabbir Tiles and Ceramics and a couple of cement stocks fared well on the back of near-term positive outlook.
Technology stocks registered a total trading volume of 44.6 million shares, followed by power companies (43.1 million) and cement firms (41.6 million), the report said.
JS Global analyst Maaz Mulla said the market remained volatile throughout the day, touching intraday low of -502 points. The index closed at 41,829, down 345 points.
Traded value stood at $78 million while volumes came in at 441 million shares, up 2%.
On the news front, the State Bank of Pakistan left the policy rate unchanged at 7%, saying such a step was necessary to provide necessary support to the emerging recovery.
Moreover, a massive gas deficit was feared in the forthcoming winter season, when even the maximum import of 1.2 billion cubic feet of LNG per day would be insufficient to avert the impending outages.
Selling pressure was witnessed in the overall market with banking and exploration and production sectors losing value the most.
Meezan Bank (-2.4%), The Bank of Punjab (-2%), UBL (-1.6%), HBL (-1.2%), Bank Alfalah (-1%), Pakistan Oilfields (-1%), Pakistan Petroleum (-2%) and Oil and Gas Development Company (-1.1%) remained in the negative zone.