Stocks routed on fears for delay in IMF bailout deal

Stocks tumbled over three percent -- the most in nearly two years-- on Monday as a wave of panic selling swept blue-chip shares on fears of a delay in International Monetary Fund (IMF) bailout agreement would further drag the already deteriorating economy, dealers said.

“The index registered largest single day loss of over 3 percent after 15 months and touched a 27 months low… this is because the newly elected government has failed to entice investors amid lack of clarity over decision to enter IMF program, we believe,” said Topline Research in its post market note.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index fell 3.39 percent or 1,328.06 points to close at 37,898.29 points, while its KSE-30 Shares index lost 3.53 percent or 672.99 points to end at 18,404.88 points.

As many as 385 scrips were astir today, of which 30 moved up, 341 retreated, and 14 remained unchanged. The ready market volumes stood at 186.005 billion shares as compared with the turnover of 154.094 billion shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said panic selling continued amid higher trades at the apex bourse on concerns over dismal economic outlook and global equities sell-off.

He said a record Rs1.55 trillion pending circular debt, foreign outflows, uncertainty over outcome of FATF compliance review meetings on action plans, record fall in foreign exchange reserves, fears over likely IMF policy measures on further hike in gas and power tariff, surge in interest rates and rupee depreciation “played a catalytic role in the record fall”.

Shumaila Badar, head of research from Ismail Iqbal Securities, said the market’s meltdown continued as investors were fearful that the government might take tough austerity measures upon IMF's guidance.

Badar said banks and oil and gas exploration and production sector would gain from such measures; however, they could also not escape the overall panic in the market, while investors were also fearful about the ongoing meetings between the government and the FATF.

“The rout may continue, but we advise to start accumulating banks and exploration and production shares as these sectors should recover,” Badar added.

The highest gainers were Unilever Foods, up Rs165.00 to close at Rs7100.00/share, and Island Textile, up Rs75.00 to finish at Rs1848.00/share.

Companies that booked highest losses were Rafhan Maize, down Rs378.00 to close at Rs7191.00/share, and Bata Pakistan, down Rs75.00 to close at Rs1720.00/share.

Flying Cement Company Limited saw the highest volumes with a turnover of Rs62,500 shares. The scrip gained Rs0.74 to close at Rs16.45/share.

The lowest volumes were witnessed in Bank of Punjab, recording a turnover of 18.389 million shares, while the scrip lost Rs0.85 to end at Rs10.12/share.

Hamad Aslam, director research at Elixir Securities, said the panic selling was witnessed in retail names on reported margin selling.

“While index heavy MSCI scripts also came under renewed selling pressure on a reported self-off from foreign investors and potential redemption from mutual funds,” Aslam added.

Last week, all the analysts had predicted the market would face a storm and it did land spreading scare among the investors.