Stocks plunge 2.3pc as Pervez Musharraf verdict expedites overdue correction

Stocks plunged more than 2.3 percent, extending losses in the overbought market, as political uncertainty following ex-military chief Pervez Musharraf’s verdict, sped up overdue correction, dealers said on Thursday. “Market took a major plunge upon release of detailed judgment of Pervez Musharraf that caused panic among investors and raised concern about the ongoing spat between the state institutions,” brokerage Arif Habib Limited said in a report.

Pakistan Stock Exchange’s benchmark KSE-100 shares index lost 2.28 percent or 948.34 points to close at the 40,655.37 points level. KSE-30 shares index followed suit, lowering 2.22 percent or 422.89 points to end at 18,587.14 points level. Of 364 active scrips, 33 were up, 316 retreated, and 15 remained unchanged. The ready market volumes stood at 260.143 million shares compared with the turnover of 276.197 million shares in the previous session. Topline Research said previously the decline of two percent or more came 19 sessions ago when the yields increased.

“Index downturn came on the back of possible political implications after a detailed verdict from special court decision on ex-president Pervez Musharraf was announced.” Habib Metro-Financial Services said the benchmark index stayed in red for majority of the sessions.

“Growing political uncertainty following a special court’s decision to sentence a former president coupled with Ogra’s (Oil and Gas Regulatory Authority) recommendation of an increase in gas prices led to profit-taking,” the brokerage said in a report. “Furthermore going forward, improving macroeconomic indicators could further batter sentiments but growing volatility on the political side could keep these improved sentiments in check in the near-term.”

Faisal Shaji, a strategist at Standard Capital said there was an anticipated panic selling from extremely disturbing verdict by a special court. “Though in the end there was some covering on dips yet market sentiments were hurt given ‘bad language’ used by verdict.”

Shaji added that investor would remain on tenterhooks given the “confrontational mode”. Analysts said the verdict language in the judgment was quite strong or harsh, sending shivers to the investors.

The detail judgment arrived some half an hour before the closure of the market, which made deep scare at the share prices. At one stage, the index went down almost 1,189 points or almost three percent of the 100 index.

Salman Ahmad, head of institutional sales at Aba Ali Habib said the market has been in the overbought zone, and the correction was overdue.

“The decision has battered the confidence of the investors,” Ahmad said. “Political uncertainty has gripped the market, but following the settling of the dust, equities would improve soon… Friday session would likely to show depressing sentiment.”

Analysts said the judgment was enough to give a fresh setback to local investors, though the market has been undergoing adjustment and correction since the last two sessions. Analysts said the rollover week is also round the corner, which along with the country’s border tension, compelled investors to better book profits than hold positions.

The highest gainers were Shifa International Hospital, up Rs15.49 to close at Rs325.45/share and Shezan International rising Rs5.50 to finish at Rs505.50/share. Companies that booked highest losses were Nestle Pakistan down Rs384.98 to finish at Rs7,475.02/share and Bata Pakistan falling Rs99.90 to close at Rs1,955.10/share. Unity Foods Limited recorded the highest volumes with a turnover of 26.395 million shares. The scrip lost Re0.45 to end at Rs14.70/share. The lowest volumes were witnessed in Fauji Cement, recording a turnover of 6.318 million shares. Its share price lost Re0.73 to end at Rs15.89/share.