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October 22, 2019

PSX loses 2.3pc as political noise gains momentum


October 22, 2019

The capital market declined 2.3 percent on Monday, suffering fresh losses on the back of intensifying political pressure due to the long march planned by the opposition parties and the imposition of commission on brokers, dealers said.

Salman Ahmad, head institutional sales at Aba Ali Habib, said the market came under heavy attack from sellers where the host of negative factors shook sentiments of the investors.

Financial Action Task Force (FATF) issue, imposition of commission on brokers, skirmish between Pakistan and India over LOC, and commencement of roll over week settlement of future contracts were the major issues that dragged the market into the minus column.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 2.32 percent or 785.42 points to close at 33,084.73 points level. KSE-30 shares index followed suit with a low of 2.51 percent or 397.18 points to end at 15,431.45 points level.

Of 351 active scrips, 25 went up, 313 retreated, and 13 remained unchanged. The ready market volumes stood at 130.285 million shares, as compared with the turnover of 115.228 million shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Panic selling was witnessed at PSX on concerns over political and economic uncertainty.”

Stocks fell across the board amid weak quarterly financial result announcements in cement and auto sector.

FATF concerns with the overall lack of progress by Pakistan to address its financing risks and failure to complete its action plan played a catalytic role in the bearish close, he added.

Topline Securities in its post-market note said that the sentiment remained negative on political situation, which has intensified due to the upcoming long march of opposition parties.

“Government officials are yet to have any dialogue with opposition parties, which has raised concerns among investors,” the report noted.

Another analyst said that the decision to keep Pakistan on the grey list and giving four months for compliance with 26 demands sent negative signals to the investors.

“Market experts believe that the raising political temperature because of Maulana Fazal’s Azadi March and joining of opposition parties is one major factor hurting investors’ confidence in stock market,” the analyst added.

Moreover, the market remains under tremendous pressure because of the imposition of commission on the brokers. The imposition of 0.03 paisa led to sharp decline in the daily volumes.

After taking a cursory look at the daily volume pattern before the imposition of this commission, the average volume was around 284 million shares compared with 139 million shares last week, depicting a drop of 51 percent.

The highest gainers were Nestle Pakistan, up Rs235.76 close at Rs6,000.00/share, and Atlas Honda Limited, up Rs15.00 to finish at Rs320.00/share.

Companies that booked highest losses were Phillip Morris Pakistan, down Rs65.14 to close at Rs2,832.36/share, and Bata Pakistan, down Rs51.00 to close at Rs1,452.00/share.

K-Electric Limited recorded the highest volumes with a turnover of 11.200 billion shares. The scrip lost Rs0.21 end at Rs3.68/share.

The lowest volumes were witnessed in Pakistan International Bulk, recording a turnover of 3.226 million shares, whereas the scrip lost Rs0.68 to end at Rs8.36/share.