KARACHI – The KSE 100 index witnessed yet another day of correction with major oil, fertiliser and banking stocks taking a heavy pounding. The bourse lost 61 points with volumes of 46 million shares over IMF’s concerns that a delay in structural reforms program could pose a severe threat to the country’s macroeconomic situation.
The KSE-100 index closed at 11734.72 losing 61.37 points and total volume stood at 29,573,103 with the total value of 1,973,213,529. Fertiliser scrips came under immense pressure during the early trading hours with reports that Engro’s plant, along with others, faced total gas supply interruption. This was even more worrisome for investors as the plant has not achieved CoD as yet.
Foreigners were rumored to be sellers while local institutions were key participants. Among the top ten volumes leaders which were largely traded in red zone, Engro was among the top losers. Selling pressure witnessed in the stock is largely driven by foreign selling. Energy heavyweights PPL, POL and OGDC were also subdued and this impacted adversely on the overall performance of the index.
Apart from HBL, the majority of banking scrips were also sluggish after completion of the annual result season. Bilal Asif at HMFS said that ‘we hope with quarterly result season expected to kick-off in a day or two, it may provide the required boost for investors. We believe investors are skeptical and are expected to remain cautious until and unless the situation on the market becomes clearer.’
Stocks trading at high multiples along with some facing the burden of heavy and expensive debt, and those suffering from rising input costs, low exports and restricted local demand figured prominently in the ongoing sell off, not to forget those experiencing a massive run-down on reserves due to circular debt.
However shift of turnover from low priced to main board stocks, mainly due to availability of leverage has emboldened local investors enough to move against the sell-off tide, making selected stocks stringent litmus tests.
Rumors regarding a likely proposal to do away with the Capital Gains Tax (CGT) at least in its currently implemented format did play a vital role of restricting the benchmark from an otherwise massive decline.
