KARACHI: Extending overnight bearish sentiments, the stock market on Wednesday suffered a single-day largest point-wise loss on unabated across-the-board selling pressure, pushing the benchmark KSE 100 share index to just above 111,000 from 114,861 in the preceding session.

The index lost over 5,000 points or 4.4pc in two sessions post-rate cut, which could be classified as nervous selling if it was called panic-offloading despite positive economic indicators.

Tahir Abbas of Arif Habib Ltd (AHL) told Dawn that correction is healthy since the market had consistently set records in recent weeks.

He explained that extensive selling by mutual funds due to rising redemption was the key factor that drove the market down in the last two sessions.

Across-the-board selling pressure trims 4.4pc from index in two sessions

In the long term, he opined the market’s bullish outlook holds waters on the back of strong economic fundamentals. “The market is still trading at a price-to-earnings multiple of 6.2x against the last 10-year average of 8.2x and the market’s highest 12.2x, reflecting significant upside potential,” he believed, adding that this correction would help the market to consolidate the recent gains.

However, Ahsan Mehanti of Arif Habib Corporation attributed the bear run to investor’s cautious view of the State Bank’s monetary policy easing despite strong economic indicators, including 78-month low inflation below 5pc in November, close to $1bn current account surplus in 5MFY25, rising exports, foreign direct investment, reserves, etc.

Listing other depressants, he said a slump in global equities, rising foreign outflows, weak rupee, political noise, and concerns over unmet IMF tax collection targets, reforms under the $7bn Extended Fund Facility contributed to unprecedented loss at PSX.

Topline Securities Ltd noted that the benchmark index witnessed a record single-day decline of 3,790.40 points or 3.3pc in absolute terms to close the session at 111,070.29 points.

Having been net buyers for 14 consecutive sessions, local mutual funds turned net sellers yesterday and today.

The primary drivers of the downward movement were Mari Petroleum, Fauji Fertiliser, Hub Power, Pakistan Petro­leum, and Meezan Bank, which collectively accounted for an alarming 1,731 points of the index’s overall decline.

Ali Najib, Head of Sales at Insight Securities, said institutional profit-taking could be blamed for this bearish trend before the year’s end. In addition, redemptions received by mutual funds put further fuel into the fire of panic selling.

Mutual funds remained net sellers for the second day and sold shares worth $10.6m. However, individuals did value-hunting and picked shares worth $5.74m.

The trading volume fell 11.25pc to 1.1 billion shares while the traded value dipped 3.9pc to Rs60.24bn day-on-day.

Stocks contributing significantly to the traded volume included WorldCall Telecom (139.29m shares), Cnergyico PK (67.46m shares), The Bank of Punjab (60.16m shares), Pakistan Refinery (54.50m shares) and Pak Elektron (50.14m shares).

The shares registering the most significant increases in their share prices in absolute terms were Al-Ghazi Tractors (Rs51.29), Indus Motor (Rs43.66), Attock Cement (Rs23.57), PIA Holding Company [B] (Rs23.54) and Pakistan State Oil (Rs19.26).

The companies registering significant decreases in their share prices in absolute terms were Unilever Foods (Rs107.16), Rafhan Maize (Rs98.02), Ismail Industries (Rs97.98), Hoechst Pakistan (Rs91.70) and Nestle Pakistan (Rs82.48).

Published in Dawn, December 19th, 2024