Stocks take a dive on fears of economic outlook

Stocks fell over one percent on Wednesday as investors worried growing external account weaknesses could add more pressure to the country’s sluggish economic growth, dealers said.

They added that a lack of clarity on external account outlook and any major likely inflows under tax amnesty scheme, coupled with pressure on oil in international market, trade tensions between US and China and mix trends witnessed in international markets, kept investors on the sidelines.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index shed 1.56 percent or 680.00 points to close at 43,002.84 points, whereas KSE-30 shares index lost 1.59 percent or 343.29 points to close at 21,203.31 points.

Of 342 active scrips, 75 advanced and 242 declined, whereas 25 remained unchanged.

The ready market volumes stood at 136.375 billion shares compared to a turnover of 123.266 billion shares in the previous session.

Hamad Aslam, director research at Elixir Securities, said the market was under stress due to persistent foreign selling, which had been going on unabated for over last two weeks despite the rupee depreciation. “Foreign fund houses emerged as net sellers, fearing the local currency will continue to be under pressure until the government enters any new IMF (International Monetary Fund) program,” Aslam said.

Out of 680 points lost, around 295 points were contributed by Habib Bank, United Bank, Lucky Cement and OGDC (Oil and Gas Development Company), which have been under selling pressures from foreign investors.

He added that during the early hours, the market moved in narrow band but as it moved towards the close selling pressure pummeled all the blue chips and investment stocks.

Ahsan Mehanti from Arif Habib Corporation said the panic selling was witnessed in scrips across the board at the PSX owing to investors’ fears over economic uncertainty and rupee volatility. “Weak global crude prices and concerns for surging external account imbalances played a catalytic role in bearish close,” Mehanti said.

Arif Habib in its report said the market nosedived today (Wednesday) with a slide of around 700 points and the impact was seen across-the-board. Initially, the index went up by 66 points but negative vibes prevented the take-off.

The highest gainers were Sapphire Textile, up Rs51.99 to close at Rs1092.09/share, and Blessed Textile, up Rs15.26 to finish at Rs320.57/share.

Companies that booked highest losses were Nestle Pakistan, down Rs600.00 to close at Rs11,400.00/share, and Colgate Palmolive, down Rs170.00 to close at Rs3230.00/share.

TRG Pakistan Limited recorded the highest volumes with a turnover of Rs16.552 million shares, while the scrip gained Rs0.03 to close at Rs30.71/share. It was followed by K-Electric Limited with a turnover of 5.806 million shares. Its scrip gained Rs0.14 to close at Rs5.64/share.

The lowest volumes were witnessed in Pakistan Elektron. It recorded a turnover of 6.606 million shares, with its scrip losing Rs1.71 to end at Rs35.64/share.