Index sheds over one percent on SC’s extension ruling

The capital market came under pressure and shed more than one percent on Tuesday as investors sold their positions in view of likely political and economic turmoil following the Supreme Court’s decision to suspend the extension in the army chief’s tenure, dealers said.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks fell sharply lower on institutional selling after the Supreme Court suspended a government order granting a three-year term extension to the current army chief.

“Uncertainty over the impact of SBP status quo policy on leveraged scrips and economic as well as political uncertainty played a catalytic role in the bearish close,” the analyst added. Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index shed 1.09 percent or 417.23 points to close at 37,795.05 points level. KSE-30 shares index shed 1.45 percent or 256.29 points to close at 17,391.67 points.

As many as 378 scrips were active, of which 133 advanced, 234 declined and 11 remained unchanged.

The ready market volumes stood at 488.701 million shares, as compared with the turnover of 241.536 million shares a day earlier.

Arif Habib Limited in its post-market note said the market dived 676 points as the news of the SC’s decision caused panic among investors. Although a recovery was staged a couple of times, the market failed to manage the selling pressure.

The confusion amongst investors, who booked positions earlier in the session, led to selling for stemming losses, which increased trading volumes to 488 million shares, it noted.

Prime Minister Imran Khan summoned an emergency meeting of the federal cabinet to discuss the issue regarding the extension in the tenure of the Chief of Army Staff General Qamar Javed Bajwa, after the Supreme Court suspended the notification of his extension.

The rupee also took a hit of eight paisas against the dollar in the interbank market. Hub Power Company dragged the index most by 74 points, followed by the Oil and Gas Development Company 61 points, and Pakistan State Oil 34 points.

Major profit booking was witnessed in the cement sector, where DG Khan Cement went down 3.5 percent, Lucky Cement was down 2.6 percent, Pioneer Cement declined 2.8 percent, and Fauji Cement fell 2.5 percent.

Banking and E&P stocks also lost ground to market pressure where National Bank fell 3.5 percent, MCB 2.5 percent, Oil & Gas Development 3.2 percent, and Pakistan Petroleum declined 1.4 percent.

“Moving ahead, we expect the market to remain choppy on the political front therefore recommend investors to book profit on strength,” Maaz Mulla at JS Global Capital said.

Companies reflecting highest gains included Colgate Palmolive, up Rs49.99 to close at Rs2,049.99/share, and Hinopak Motor, up Rs23.13 to close at Rs511.33/share.

The most losses were registered by Philip Morris Pakistan, down Rs54.49 to close at Rs2,334.49/share, and Sanofi Aventis, down Rs36 to end at Rs705/share.

Highest volumes were witnessed in Unity Foods with a turnover of 58.079 million shares. The scrip gained 85 paisas to close at Rs12.94/share.

Fauji Foods was second with a turnover of 33.93 million shares. It gained 72 paisas to close at Rs13.31/share.

Pak Elektron was third with a turnover of 29.634 million shares. It gained 64 paisas to finish at Rs25.27/share.