The downward trend of the Pakistan Stock Exchange (PSX) continued on Thursday as well. The KSE-100 index lost 1,051 points more, leading the PSX to close in red at 43,136 points, bearing close proximity to the 12th June low of 43,027.
The factors that are contributing to the steep march of the index towards south are likely to be the reason behind rupee depreciation and the present political instability in the country.
While expressing his views in an interview given to a private news channel, BMA Capital Head of Research, Mohammad Fawad Khan said that investors are closely watching the repercussions of the ongoing political situation. The too-many what ifs and buts have brought down the confidence level of investors.
Khan further added that in addition to political instability, a few economic pointers, including the worsening position of balance of payment and the sharp decline in foreign exchange reserves, are also responsible for the recent turbulence in the market. During the financial year 2017, the country’s current account deficit rested at a shocking $12 billion.
At present, the growing demand in the country is being met through imports. However, on the other hand, the income from foreign remittance and investments, and exports are not sufficient enough to pay imports bills.
Khan believes that the only way out of the mess will lead the country to another IMF program. As a result of which the currency’s imminent tryst with depreciation would become inevitable.
An analyst at JS Global, Maaz Mulla, believes that the political instability is playing a crucial role in negatively affecting the market. NAB’s recent announcement in which former PM Nawaz Sharif and his two sons were summoned by the institution has further hit the market hard. The Top 5 contributors had the following performance: OGDC went down by 3.5 percent; UBL went down by 1.7 percent; HBL was down by 3.2 percent; POL had a decline of 5 percent; and MCB fell by 1.9 percent. The collective contribution was around 289 points to index decline.
Among the country’s major sectors, commercial banks saw major selling. After going down by 2 percent, the sector added 233 points to the overall decline. One of the banks, ABL which traded down by 0.60 percent posted its result for 1H2017. The financial statements of the organization showed an EPS of Rs5.75 and DPS of Rs1.75, taking 1H2017 payout to Rs3.5.
For the financial year 2017, the financial statements of HUBC were also posted. It presented an EPS of Rs9.24 and DPS Rs2.50. In the market, the stock of the company went down by 2.19 percent.
Only 167 shares were traded in the market. This led traded volumes to go down by 11 percent. The value of the traded stock also sharply fell to Rs8.8 billion. The decline in the ‘trade value’ also hints at the further dip in the market.
The traded volume was led by ANL, which belongs to the textile sector, after the country traded shares a total of 11.4 million shares in the market.
Stocks of 367 active companies traded in the market session. Of these stocks, a massive number of 314 were in decline, 43 were in advance and 10 remained unchanged. The above figures show that around 80 percent of the stock of active companies went down during the session. These pointers hint at unwanted consequences, including the devaluation of the currency.
Many brokers have expressed their opinions saying that the end of the current political situation is not in sight. Therefore, it is expected that the stock market will continue to tread on the downward trend.