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Thursday March 28, 2024

Stocks hit by scares of ‘what’s next’ after Iran retaliation

By Our Correspondent
January 09, 2020

Stocks on Wednesday were hit by Iran’s missile attacks on US military bases in Iraq, panicking big players into offloading risky holdings to avoid losses on fears of an escalation of the conflict, dealers said.

At Pakistan Stock Exchange (PSX), the benchmark KSE-100 shares index lost 1.31 percent

or 546.90 points to close at 41,357.57 points, while KSE-30 shares index slipped 1.35 percent or 260.12 points to end at 19,071.34 points.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks fell sharply lower amid Asian equity sell-off on a flare-up in US-Iran tensions”.

Late session interest in oil and banking scrips amid surging global crude oil prices supported the index to close above session lows, Mehanti said.

“Investor concerns over subdued LSM (large scale manufacturing) growth data for July-December 2019 and surging circular debt receivables in energy sector weighed heavy,” Mehanti added.

Of 353 active scrips, only 42 were up, as many as 292 down, and 19 ended unchanged.

Volumes improved to 280.071 million shares, compared to 206.892 million shares a day earlier.

Salman Ahmad, head of institutional sales at Abba Ali Habib Securities, said “The continuous rift between the US and Iran led to this decline”. “However, owing to its fundamental strength, the market after losing more than 800 points recovered sharply with the support of financial institutions and foreign funds”.

The international situation would decide the future course of the market; however, inherent sentiment had been quite strong and improvement in overall affairs would lead to a health recovery, Ahmad added.

A leading trader said international tension once again escalated as Iran attacked US forces in Iraq by firing a dozen of ballistic missiles on at least two Iraqi bases which kept Pakistan’s equity market under pressure and offset the Tuesday’s gains.

“Rise in oil prices does not bode well for Pakistan as the economy right now is quite sensitive

to this factor and as a result the main indicators will remain under stress for a while,” the trader said.

He said, however, some relief was expected in the coming sessions on the economic front as ECC meeting might release some funds to reduce the volume of circular debt, which would help companies in the oil marketing and gas companies to improve their balance sheets.

Arif Habib Limited in a note said, “Again, the market took the toll of early morning Iranian strike on Iraqi military base housing American soldiers”.

Oil price went haywire with an initial surge towards $72/bbl, but gradually came down as Iranian government signaled an end to confrontation for the time being, the brokerage house added.

The highest gainers were Bhanero Textile, up Rs19 to close at Rs899/share, and Bata Pakistan, up Rs16 to finish at Rs1,956/share.

Companies that booked highest losses were Indus Motor Company, down Rs48.57 to close at Rs1,028.78/share, and Sapphire Textile, down Rs35.50 to close at Rs962.83/share.

K-Electric Limited recorded the highest volumes with 39.458 million shares, but lost Rs0.15 to end at Rs4.43/share.

WorldCall Telecom posted the lowest turnover with 5.180 million traded shares, losing Rs0.09 to end at Rs1.30/share.