Stocks on Tuesday dropped to near three-year-low, entangled in the strings attached with the International Monetary Fund (IMF) bailout package, while questions over what tricks the new finance wizard have up his sleeve to shore up economy in the short-term also proved a drag, dealers said.
Topline Securities in its market review said the benchmark index hit its lowest position since May 31, 2016 (nearly 3 years).
“This significant fall in value of equities is due to overall uncertain economic situation prevailing in the country as delay in the much anticipated IMF program and amnesty scheme dejected investors,” the brokerage said.
Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 1.35 percent or 497.66 points to close at 36,404.03 points, whereas KSE-30 hit a low of 1.25 percent, losing 218.72 points, to end at 17,324.85 points.
Of 330 active scrips, 62 moved up, 251 retreated, and 17 remained unchanged. The ready market volumes stood at 119.605 million shares, as compared to a turnover of 125.964 million shares in the previous session.
Analyst Ahsan Mehanti from Arif Habib Corporations said the market saw panic selling led by concerns over economic uncertainty and federal cabinet’s reservations over proposed tax amnesty scheme.
“Weak corporate earnings, pre budget uncertainty and concerns over likely surge in oil import bill owing to surging oil imports, rising global crude oil prices played a catalyst role in bearish close,” Mehanti added.
Mohammad Sohail, Chief Executive Officer at Topline Securities, said, “Stocks went down to 3 year low owing to rollover of futures contracts and uncertainty on economy and IMF front affecting local equities”.
Zeeshan Afzal, director research at Insight Securities said selling from mutual funds hammered the index, while developments about tough fiscal policy and tightening eroded the sentiment.
“The higher taxes and utilities prices are likely to increase inflation in the coming days, which is likely to widen fiscal deficit, adding to the burden on economy,” Zeeshan added.
Salman Ahmad, head of institutional sales at Aba Ali Habib said recent article of Dr Ashfaque Hassan claiming that IMF had asked the government to disclose investment made by China under China-Pakistan Economic Corridor (CPEC) gave negative signals to the market men.
“Investors were of the opinion that failure to disclosure might hinder loan approval, explanation should be sought from the former finance minister,” Ahmad said.
The market is deep in depression and in the last two sessions it lost almost 1,000 points with the benchmark index touching the session low of 36,136 points, falling below resistance level which is a bad omen.
The highest gainers were Unilever Foods, up Rs94.44 to close at Rs6594.44/share, and Murree Brewery, up Rs11.91 to finish at Rs781.00/share.
Companies that booked highest losses were Phillip Morris Pakistan, down Rs165.62 to close at Rs3146.86/share, and Bata Pakistan, down Rs40.50 to close at Rs1630.00/share.
Lotte Chemical recorded the highest volumes with a turnover of 11.995 million shares. The scrip gained Rs0.08 to close at Rs16.16/share.
The lowest volumes were witnessed in K-Electric Limited recording a turnover of 9.877 million shares, whereas the scrip loss Rs0.12 to end at Rs4.69/share.