KSE tumbles as PML-N govt rolls up sleeves for Musharraf trial

Fearing adverse economic fallout of Monday’s decision of the Sharif-led federal government to try former military ruler Pervez Musharraf for treason played havoc at the Karachi bourse which was driven by the risk-averse sentiments.
The first day of the week saw the Karachi Stock Exchange (KSE) 100-share index start a southward journey as soon as media reported Attorney General Munir A Malik informing the Supreme Court that the Pakistan Muslim League-Nawaz (PML-N) government was fully committed to try Musharraf and his abettors for high treason in line with provisions of the constitution.
Panic selling of equities was witnessed at the country’s largest bourse with the benchmark index tumbling by a huge 650.27 points to close at 21,048.08 points. Friday, last trading session, had seen the index ending at 21,698.35 points. In percentage terms, the index lost 3 percent.
“Panic selling was witnessed in stocks across the board after Nawaz Sharif ordered registering a high treason case against the former president over violating the constitution under Article 6,” viewed Ahsan Mehanti, a senior equity analyst from Arif Habib Securities. As television channels aired the news of trying the jailed former military ruler, investors on stock markets started offloading their shares causing the index to plunge to an intraday low of 20,999.32 points.
Earlier, taking a bullish posture, the benchmark index, which reflects trading in the shares of the 100 most actively traded listed firms, had climbed to an intraday high of 21,833.48 points.
The news even offset Friday’s positive impact of a 50 basis points rate-cut by the central bank which further reduced the cost of bank borrowing for businesses. The state bank, in its latest monetary policy stance, slashed the discount rate to 9 percent citing easing inflation and low private sector credit as major contributing factors.
Other factors that made the market go bearish, Mehanti said, included fall in global stocks and commodities, limited foreign interest and the prevailing economic uncertainty, especially, in the wake of federal government’s harsh decision to increase GST on services by one percent.
This, analysts observed, was despite positives like the 0.50 percent rate-cut by the central bank and investors’ expectations for an early resolution of the lingering circular debt crisis. Finance Minister Ishaq Dar has, reportedly, set June 30 as the deadline for clearing a major chunk of the Rs 5.3 billion circular debt.
Despite the index losing hundreds in points, trading turnover for the day remained upward at 323.161 million shares compared to 276.68 million in the previous session.
Trading was witnessed mainly in third and second tier stocks with Fauji Cement appearing as the volume leader of the day by counting its traded shares at 41.26 million. In terms of value, however, the scrip braved a 28-paisa per share loss with its share price closing at Rs 13.25.
Accumulative value of the stakes traded also rose to Rs 10.543 billion from Friday’s Rs 9.647 billion. Of the total 380 scrips traded, 46 saw their share price growing, 319 declining and 15 as unchanged.
Market capitalisation was set in the red zone at Rs 5.127 trillion as compared to Rs 5.275 trillion of last week. The free-floating KSE-30 index too, shed 506 points or 3 percent and closed at 16,332.14 points against the previous 16,838.19 points. Turnover on futures market, however, was encouraging and went up to 39.79 million shares compared to 19.96 million on Friday.