Stocks tumble 1.5pc as rupee devaluation raises red flag on economy

By Our Correspondent
July 17, 2018

Stocks ended down by 1.5 percent on Monday as rupee, devalued by over five percent against dollar in the inter-bank market, sends negative signals to the foreign as well as domestic investors about the murky economic situation, dealers said.

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Zeeshan Afzal, director research at Insight Securities, said, “All hell broke loose with benchmark KSE-100 index dropping sharply to close below the psychological level of 40,000 points.” Banks also feared massive decline despite 100 basis points hike in policy rate due to foreign fund houses selling amid escalating macro concerns. Cement, steel, and oil, all fared pressure due to weak external account and uncertain political environment, he added.

Pakistan Stock Exchange (PSX) KSE-100 shares index shed 1.50 percent or 605.23 points to close at 39,665.77 points. KSE-30 shares index shed 1.68 percent or 333.50 points to finish at 19,531.94 points.

Of 348 active scrips, 83 advanced, 236 declined, and 29 remained unchanged. The ready market volumes stood at 147.480 billion shares compared to a turnover of 124.749 billion shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Panic selling was witnessed at the PSX amid pressure in scrips across the board after rupee plunged to record low against dollar on investor concerns for economic uncertainty.”

Leveraged sectors battered after 100bps surge in SBP key policy rate. Ongoing political noise, foreign selling and concerns for external account crises played a catalytic role in the bearish close, he added. Caretaker Finance Minister Dr Shamshad Akhtar had said the other day that spadework has begun for the International Monetary Fund (IMF) programme, and foreign exchange reserves were barely enough to cover one and a half month of the import bill. “This shows that coffers are under pressure and need immediate remedial measures. The only solution left is to knock the door of the IMF to seek another bailout package,” a leading trader said.

The highest gainers were Colgate Palmolive, up Rs139.22 to close at Rs3,059.00/share, and Island Textile, up Rs34.25 to finish at Rs1,239.25/share. Companies that booked highest losses were Phillip Morris Pakistan, down Rs144.49 to close at Rs2,745.50/share, and Pakistan Tobacco, down Rs107.50 to close at Rs2,042.50/share.

Bankislami Pakistan recorded the highest volumes with a turnover of 9.105 million shares. The bank’s scrip gained Rs0.32 to close at Rs12.37/share. It was followed by Faysal Bank with a turnover of 4.552 million shares. Its scrip gained Rs0.42 to close at Rs27.04/share. The lowest volumes were witnessed in Fauji Cement, recording a turnover of 10.467 million shares and losing Rs0.98 to end at Rs19.24 /share.

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