The Pakistan Stock Exchange endured another beating on Tuesday as investors remained nervous about the higher-than-expected interest rate hike, of 150 basis points by the central bank. The benchmark KSE-100 index lost more than 700 points for the second consecutive day plunging below the 45,000 point level.
Owing to the gloomy economic outlook, bulls remained on the sidelines as bears dominated the market.
Speculations regarding the strict conditions put down by the International Monetary Fund (IMF) to release the next tranche of the loan, such as higher power tariff and taxes, appeared to be causes for concern among investors and drove across the board selloff at the bourse.
The foreign debt soared to $3.8 trillion during the first four months of the current fiscal year in addition to the foreign selling further shattering the confidence of the market participants.
Trading started with a short-lived rally as the index was unable to maintain its upward march and fell to the selling pressure. The market continued in the red zone during the rest of the day and fell steadily until the session closed.
Towards closing the benchmark KSE-100 index recorded a drop of 796.48 points, or 1.74%, as it settled at 44,948.52.
According to the report from Arif Habib Limited the bears dominated over the bulls again on Tuesday as investors failed to digest the hawkish stance of the last MPC that resulted in double digit six-month Kibor.
A drastic increase in the finance cost of leveraged businesses will lead to lower profits as a major portion of borrowing appears from Kibor-led lending.
The second day of the roll-over week fell under pressure because the investors remained cautious and decided on squaring of roll-over positions.
During the last trading hour, the PSX saw a bloodbath as selling took over across the board.
Sector-wise, those contributing to the performance comprise technology (-178 points), cement (-145 points), commercial banks (-94 points), exploration and production (-64 points), and oil marketing companies (-44 points).
TRG Pakistan Limited led the volume chart with 19.63 million shares, dropping by Rs7.16 to close at Rs88.35. It was followed by WorldCall Telecom with 17.17 million shares, losing Rs0.06 to close at Rs2.17, and Byco Petroleum with 13.76 million shares, losing Rs0.31 to close at Rs6.52.
As per data compiled by the National Clearing Company of Pakistan, foreign institutional investors were net sellers of Rs744.72 million worth of shares during the trading session.
Analyst at JS Global Neelam Naz said that the market experienced another bloodbath, losing 796 points to close at 44,948 level.
Major contributions in terms of volume came from TRG Pakistan Limited (-7.5%), WorldCall Telecom (-2.7%) and Byco Petroleum (-4.5%).
In general, the investor participation at the bourse was sluggish amid the ongoing rollover week.
Naz said, “Going forward, the market may likely consolidate amid uncertainty and lack of positive triggers, therefore, investors are advised to wait for dips in the market to take a position in blue-chip stocks mainly banking, fertilizer, and power sector”.
Overall trading volumes increased to 264.61 million shares compared to Monday’s tally of 261.9 million. The shares traded during the day were valued at Rs9.73 billion.
Shares of 358 companies were traded. Towards the end of the day, 49 stocks closed higher, 297 declined and 12 remained unchanged.
