Stocks nosedive on mutual fund redemptions

Stocks went into rout on Wednesday as buzz about a number of redemptions in mutual funds, struck investors off guard, panicking them into ditching risky assets amid economic misgivings, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index closed lower by 637.98 points or 1.48 percent to 44,833.43 points, with the highest and the lowest of the session being 45,578.56 and 44,735.94 points.

The market came under immense selling pressure, which persisted without a letup throughout the day and ended deep in losses as the government imposed new restrictions to curb the surge in Covid-19 cases.

JS Research in its daily market review said the PSX witnessed a bloodbath amid rumours of multiple mutual fund redemptions in the market.

Major laggards were TRG, LUCK, PSO, ENGRO and MCB, the brokerage said.

“Going forward, we recommend investors avail any downside as an opportunity to buy shares in the technology, fertiliser, oil, and gas exploration, and cyclical sector,” analysts at JS Research suggested.

KSE-30 Shares Index also lost 274 points or 1.53 percent to close at 17,651.77 points.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks fell across the board on shaky economy.

Uncertainty over SBP (State Bank of Pakistan) policy note next week and investor fears over possible monetary tightening ahead of IMF (International Monetary Fund) policy board review on Jan 28 plagued the stocks, Mehanti said.

Traded shares, however, increased 71 million to 236.93 million from 165.13 million. Traded value ticked up to Rs8.66 billion from Rs7.56 billion. Market capital reduced to Rs7.703 trillion from Rs7.803 trillion. Out of 360 companies active in the session, 56 posted gains, 289 losses, while 15 remained unchanged.

Topline Securities in a post-trade note said profit-taking was witnessed across the board on higher international commodity prices as the market made an intraday low of 773 points.

Initial pressure came from TRG as it closed at its lower limit, the brokerage said adding that cements and banks also came under hammer, crushing LUCK, PSO, MCB, and ENGRO.

The highest increase was recorded in the shares of Unilever Foods, which rose Rs100 to Rs20,999 per share, followed by

Sapphire Textile that rose Rs74 to Rs1,124 per share.

A major losses went the way of Bata (Pak) XD, which fell Rs98 to Rs1,902 per share, trailed by Colgate Palmolive that dropped Rs78.99 to Rs2,420.01 per share.

WorldCall Telecom was the volume leader with 27.32 million shares, followed by TRG Pakistan Ltd with 20.19 million shares.

Stocks that recorded significant turnover included Telecard Limited, Cnergyico PK, Hascol Petrol, Ghani Global Holdings, Hub Power Co, Avanceon Ltd, Al-Shaheer Corp, and Octopus Digital. Turnover in the future contracts increased to 75.33 million shares from 52.47 million.