Havoc wreaked in the Pakistan Stock Exchange amidst political turmoil as the benchmark experienced a second consecutive downward trend yesterday. The benchmark index plunged over 1,000 points during the first hour of the trading session to test 41,000 level.
The trading session started lower and slipped in red with benchmark KSE-100 index, testing 41,000 points, shedding 2.5%, on selling primarily by local retail. The reason why investors were selling local retail stocks is because they remained concerned over soaring current account deficit and exhausting foreign exchange reserves. Nevertheless, due to hefty buying of heavyweight stocks during the latter hours of trading session, KSE-100 index recovered up to a great extent. The tumble was followed by an encouraging rebound on reported domestic institution buying that helped in recovering the day’s losses.
“Stocks closed lower amid concerns for political uncertainty and weak financial results. Surge in global crude prices amid falling US inventories and reports that PM family did not receive NAB notice to appear for NAB reference in the Panama case invited mid-session support. Foreign outflows, concerns for economic uncertainty and dismal trade deficit data for Jul’17 played a catalyst role in bearish close at PSX”, commented senior analyst, Ahsan Mehanti.
Moving on to leader board, the most positive impact on the benchmark index came from Engro Corp, while Lucky Cement contributed most negatively to the index. Adding to that, DG Khan Cement also continued its downward trend streak and traded at a lower price limit resulting in higher volume since January of this financial year.
On the other hand, cement sector mostly remained under pressure and contributed 128 point in the drop of the index on the back of investor’s concerns of cement pricing. Pharmaceutical sector contributed 34 points to index, and commercial bank contributed 42 points, a report of Topline Security analysts said.
Overall, volume of the index improved by 42% to 217 million whereas traded value was up 56% to Rs. 12.2 billion.
Many analysts believe that the drop in the index will continue its streak on the back of political turmoil and concerning economic indicators. Also, redemptions from Mutual Funds are likely to cause further selling pressure.