Stocks tumble down as political chaos engulfs economy

KARACHI: The stock market on Tuesday recorded increased activity, albeit to its own detriment, as the benchmark index plunged over 1,300 points due to rising political temperature and concerns over higher taxes on stockbrokers.
Dubious statements from ex-prime minister Nawaz Sharif and a reactionary show of power by a large opposition party near the federal capital perturbed investors, especially institutional investors, causing a dearth of buyers in the stock market.
At close, the benchmark KSE 100-share Index recorded a decrease of 1,389.04 points or 3.07% to close at 43,899.45.
According to Elixir Securities, Pakistan equities extended losses after holidays and the benchmark index slipped below 44,000 points (down 3.1%) as worries over domestic politics and increased taxation on brokers hung over the market.
“The market started on a weaker note and struggled for direction in early hours with stocks seeing range-bound trading and, thereafter, most index names across major sectors received a hammering, predominantly from institutional investors,” it said.
Amidst no serious buyers on the screen, small and mid-cap plays followed suit and closed in the red territory.
On the KSE-100 index, just two stocks defied the bearish trend and traded positive, 13 remained unchanged while 85 names closed in the red, of which 37 closed at their respective lower price limits or fell by more than 4%.
“Maple Leaf Cement (-4.14%) announced a right share issue after the market’s close. The news was largely anticipated as the company had already announced that it would be finalising sources of financing (for its upcoming capacity expansion) in the board meeting (the stock has corrected 15% since the middle of last week).
“We expect the index to find some stable ground near current levels. However, we don’t see any major bounce back in the days ahead as domestic politics remains a dampener and will keep any sharp upside in check,” the report added.
JS Global analyst Maaz Mulla said the market witnessed another uninspiring session with a sharp decline in the KSE-100 index.
“On account of political uncertainty and selling pressure from foreign investors, the KSE-100 index lost 1,389 points to close at 43,899. Oil and Gas Development Company (OGDC, -3.95%), Engro (-4.28%), Habib Bank (-1.76%), MCB Bank (-3.54%) and Hubco (-3.35%) were among major laggards that dragged the index down,” Mulla said.
Volumes stood at 191 million shares, where The Bank of Punjab (-4.97%) from the banking sector led the volumes with 12 million shares changing hands.
Sui Southern Gas Company (SSGC, -5%) hit its lower lock on the back of news regarding Ogra cutting rate for the company by Rs10 per unit.
“International Steels (-4.24%) closed near its lower circuit. The company announced its year-end results, posting earnings per share (EPS) of Rs7 and a final cash dividend of Rs3.50,” Mulla said.
The exploration and production (E&P) sector closed in the negative zone as oil prices slid for a second session, plumbing fresh three-week lows due to a stronger dollar and concerns over a global supply glut.
Pakistan Petroleum (-2.93%), Pakistan Oilfields (-2.04%) and OGDC (-3.95%) were among losers in the E&P sector.
Pakistan State Oil (-2.23%), SSGC (-5%) and Sui Northern Gas Pipelines (-5%) from the oil and gas marketing companies’ (OMC) sector also recorded selling pressure in the sinking market despite positive news that the Economic Coordination Committee (ECC) was expected to consider increasing profit margins of the OMCs and dealers.
Maple Leaf Cement (-4.14%) released material information, announcing a 12.50% right share issue at a price of Rs65 per share for grey clinker production.
Overall, trading volumes rose to 191 million shares compared with Friday’s tally of 113 million.
Shares of 392 companies were traded. At the end of the day, 37 stocks closed higher, 341 declined while 14 remained unchanged. The value of shares traded during the day was Rs9.1 billion.
The Bank of Punjab was the volume leader with 12.4 million shares, losing Rs0.55 to close at Rs10.51. It was followed by K-Electric with 12.2 million shares, losing Rs0.24 to close at Rs6.66 and Azgard Nine with 9.85 million shares, losing Rs1 to close at Rs15.59.
Foreign institutional investors were net buyers of Rs335 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.