There was no respite for the Pakistan Stock Exchange on Wednesday as the KSE-100 index fell 293 points owing to a jump in international commodity prices and weakening local currency.
A spike in global coal prices sparked panic among local investors, who feared that inflationary pressure would mount in the country.
The rupee fared no better and ended the day at an all-time low of Rs170.96 against the US dollar. The currency’s fall enhanced selling pressure in the stock market as market participants expected inflation reading to climb further.
All index-heavy sectors bore the brunt of pessimism at the bourse and closed with significant losses.
The ongoing review of Pakistan’s economy by the International Monetary Fund (IMF) kept investors at bay and market participation remained thin.
Earlier, trading began on a positive note and the KSE-100 index inched up in initial hours. However, the uptrend could not be sustained due to poor macroeconomic cues.
Selling pressure emerged towards midday, which pulled the market down. Cherry-picking by investors in the final hour helped the bourse stage a partial recovery, but stock selling erased the gains.
At close, the benchmark KSE-100 index recorded a decrease of 293.34 points, or 0.66%, to settle at 44,373.23.
Arif Habib Limited, in its report, stated that selling pressure continued unabated at the bourse, courtesy of foreign investors.
“Eye watering commodity prices, especially coal, have had their bearing on cement and steel sector stocks and had ripple effect on oil and gas marketing companies, exploration and production sectors due to concerns over potential increase in circular debt from rising energy costs,” it said.
A key condition of the IMF for the resumption of its loan programme was the upward revision in electricity tariff, besides an end to subsidies and increase in tax revenues.
These measures were expected to dent earnings growth of the corporate sector in the coming quarters, which was reflecting in stock prices as well, it said.
The ripple effect of selling in cyclical as well as oil and gas stocks was seen in the overall market with significant selling pressure on TRG Pakistan among tech sector stocks, the report said.
JS Global analyst Neelum Naz said that the KSE-100 index touched an intra-day high of 44,795 points in initial hours, but could not sustain the momentum and slid to 44,373 points by the close of trading.
Increasing commodity prices amid supply concerns dampened market sentiment.
“The market is expected to remain volatile in the coming sessions and value buying across the board is advised,” the analyst said.
Overall trading volumes decreased to 252.8 million shares compared with Tuesday’s tally of 334.7 million. The value of shares traded during the day was Rs10.1 billion.
Shares of 554 companies were traded. At the end of the day, 109 stocks closed higher, 423 declined and 22 remained unchanged.
Unity Foods was the volume leader with 25.7 million shares, gaining Rs0.08 to close at Rs31.88. It was followed by Telecard Limited with 20.2 million shares, losing Rs1.35 to close at Rs18.60 and WorldCall Telecom with 16.8 million shares, losing Rs0.14 to close at Rs2.69.
Foreign institutional investors were net sellers of Rs622.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.