KARACHI: Equities fell like nine-pins on the Pakistan Stock Exchange (PSX) on Tuesday as the PTI protest in the capital rattled the market confidence, sending investors into panic selling. As a result, the benchmark KSE 100 index suffered the biggest single-day plunge amid growing uncertainty.

After a positive start towards the psychological barrier of 100,000, the stock prices witnessed a bloodbath triggered by massive selling by mutual funds and foreigners as the deteriorating law and order situation led to the cancellation of cricket matches with the visiting Sri Lankan team, a clear indication that the security situation is not as good as was being presumed as the PTI protesters reached the capital by removing the unprecedented barriers.

However, the trading volume surged past one billion shares, indicating an across-the-board selling spree. The index peaked at 99,819.59 with an intraday gain of 1,739.81 points. However, the bullish momentum reversed sharply, driving the index down to a low of 94,180.60, marking a substantial decline of 3,899.18 points. Ultimately, the index settled at 94,574.16 after losing 3,505.62 points or 3.57pc day-on-day.

Speaking with Dawn Ali Najib, Sales Head at Insight Securities, said the PSX experienced a historic plunge, with the KSE-100 index dropping 5.6pc intraday before closing at 94,574 (3.57pc). “Political instability and large-scale protests eroded investor confidence, triggering across-the-board selling in major sectors like banks, fertilisers, exploration and production, and technology, marking this as Pakistan’s ‘Black Tuesday’,” he remarked.

Market capital falls Rs481bn as investor confidence shattered

“The market’s outlook remains grim, with the index possibly testing 92,500 and then 90,0000 amid uncertainty. Political stability is crucial for recovery, as investors await clarity. History suggests markets rebound after shocks, offering hope for the future. Until then, caution and focusing on quality investments remain essential for navigating this turbulent period,” Mr Najib observed.

He added that unless there is a resolution to the protests or some stabilising political development, the market may continue to slide, potentially heading toward the 90,000 mark as investors wait for more clarity.

Ahsan Mehanti of Arif Habib Corporation said the banking sector outperformed after the State Bank decided to drop the minimum profit rate on deposits of FIs, PSEs and PLCs.

However, he added that political uncertainty, foreign outflows, and selling pressure on PSX’s future contract rollover contributed significantly to the downturn at PSX.

Topline Securities Ltd CEO Mohammed Sohail said the PSX lost Rs481 billion in market capitalisation due to opposition protest.

Tahir Abbas of Arif Habib Ltd hoped the market would recover sharply if political dust settled.

The overall trading volume surged 74.35pc to 1.12 billion shares while the traded value also rose 68.95pc to Rs43.29bn on a day-on-day basis.

Stocks contributing significantly to the traded volume included K-Electric (101.63m shares), The Bank of Punjab (92.02m shares), Hascol Petroleum (73.32m shares), Fauji Foods (54.11m shares) and Sui Southern Gas Company Ltd (54.08m shares).

The shares registering the most significant increases in their share prices in absolute terms were Sapphire Textile (Rs40.88), Mehmood Textile (Rs35.02), Macter International Ltd (Rs23.61), Biafo Industries (Rs14.95) and JDW Sugar Mills (Rs13.88).

The companies registering significant decreases in their share prices in absolute terms were Rafhan Maize (Rs141.07), Unilever Foods (Rs112.79), Nestle Pakistan (Rs98.00), Abbott Laboratories (Rs80.61) and Service Industries (Rs80.22).

Foreign offloaded shares worth $2.1m. Mutual funds also resorted to profit-taking and disposed of shares worth $15.13m. However, individuals emerged as the biggest buyers, picking up shares worth $10.61m.

The PSX, until Monday, staged robust performance, scaling an all-time high above 98,000 on rising exports, remittances, and falling lending costs, attracting massive inflows from fixed-income deposits to equities for higher returns.

Other than political turmoil, many factors reflected that not everything was good on the economic front. In its recent visit for an informal assessment, the IMF mission also raised concerns about revenue shortfalls, external financing gaps, delays in debt rollover, unsuccessful attempts to privatise PIA, etc.

Published in Dawn, November 27th, 2024