From Zeeshan Mirza
KARACHI: The Pakistan Stock Exchange witnessed intense selling pressure with the benchmark KSE-100 index shedding nearly 1,000 points on Tuesday.
Investors reacted with panic to the depreciating Pakistani rupee against the US dollar and the uncertainty that surrounded the country’s political arena after the Punjab by-elections.
The market opened at 41,367.11 points but it plunged by 978.04, or 2.36%, points to close at 40,389.07 points — a 20-month.
Capital market expert Saad Ali told media that the bloodbath session occurred due to political uncertainty following PTI’s landslide victory in the Punjab by-polls on Sunday.
He said it is unclear what the strategy of the PML-N, who have lost Punjab, will be to remain in power, and what the impact will be on Pakistan’s deal with the International Monetary Fund (IMF).
It bears mentioning that the global money lender has expressed its willingness to deal with a caretaker government if the country goes to the polls, but that would mean a delay in the disbursement of the $1.17bn in funds that were to follow a nod by the IMF Board.
With a delay in the release of the funds, the country’s foreign exchange reserves will deplete further.
“The market is looking for a political direction. In the absence of certainty, investors will remain jittery and dumping of stocks will continue,” the analyst said.
Arif Habib Limited Head of Research Tahir Abbas told Geo.tv the market has witnessed a day-on-day decline of 2.36% and that a negative trend has been witnessed in the stock exchange since Monday.
“The political uncertainty has elevated since the weekend after the Punjab by-elections and much depends on what decisions the federal government makes next,” Abbas said, as speculations rise over whether or not the coalition government will continue its tenure.
He noted that another factor that was responsible for the meltdown was the massive depreciation of the rupee against the US dollar — which shattered all records Tuesday.
Abbas added that the Fitch Ratings also played a role in affecting the trade, as the rating company downgraded Pakistan’s outlook from stable to negative.
The stocks of a total of 399 companies were traded during the day, out of which 46 were in the green, 285 red, and 8 remained unchanged.
Overall trading volumes rose to 194.86 million shares compared with Monday’s tally of 151.35 million. The value of shares traded during the day was Rs5.78 billion.
Karachi-Electric was the volume leader with 19.6 million shares traded, closing at Rs3.02 as the price fell by Rs0.03. It was followed by Worldcall Telecom Limited with 17.6 million shares traded, losing Rs0.11 to close at Rs1.25 and Cnergyico PK Limited with 9.96 million shares traded, losing Rs0.16 to close at Rs5.02.
