Late buying helps KSE-100, but index still closes 641 points lower

It was chaos for Pakistan's equity market on Wednesday as uncertainty pertaining to revival of the International Monetary Fund (IMF) programme as well as negative economic indicators kept investors under pressure, with the benchmark KSE-100 Index dropping over 1,100 points in intra-day trading.

However, final-hour value-buying helped the index recoup some of its losses with the KSE-100 index finishing an overall 641.21 points or 1.47% lower. At close, the index settled at 42,863.15 after having hit an intra-day low of 42,394.32.

The market had earlier nosedived 1,110 points, driven by uncertainty pertaining to the revival of the IMF programme as well as negative economic indicators.

The selling wave came as investors' concerns increased over Pakistan's balance-of-payments situation in the face of a widening current account deficit along with expectations of further inflation and an interest-rate hike in the upcoming monetary policy announcement. Additionally, ongoing political noise in the country and a general sentiment on an uncertain economic policy added to the concerns. Towards the end of the session, investors began value-hunting that aided its recovery.

Just two days ago, the benchmark KSE-100 Index had suffered its biggest fall – in terms of percentage – of 2022 after a 3.23% decrease.

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“The pressure on the economy is being reflected in the markets,” Sana Tawfik, vice-president research and a senior analyst at Arif Habib Limited (AHL), told Business Recorder. “Pressure will remain in the market until clarity is achieved after the IMF meeting on May 18, as there are no positive indicators in the market,” she said.

“Meanwhile, the market anticipates a further rate hike in the upcoming Monetary Policy Committee (MPC) meeting on May 23. After IMF negotiations, reversal of various subsidies is also expected."

A report from Topline Securities stated that after a sideways open, market plunged over uncertain economic and political conditions. Moreover, higher international commodity prices and increasing dollar rate kept the investors’ confidence in check.

The last trading hour witnessed value-buying in cement stocks, helping the index recover with positive momentum, said a report from Arif Habib Limited.

SBP-held foreign exchange reserves fall another $59mn, now stand at $10.5bn

On the economic front, the local currency faced fresh devaluation and breached the 190 mark against the US dollar for the first time in history.

Sectors driving the benchmark KSE-100 index downward included banks (110 points), fertiliser (71.2 points), cement (64.3 points), and power (50.9 points).

Volume on the all-share index rose to 338.54 million from 233.86 million on Thursday. The value of shares traded jumped to Rs9.53 billion from Rs6.86 billion recorded in the previous session.

WorldCall Telecom was the volume leader with 31.4 million shares, followed by Cnergyico PK with 24.78 million shares, and Pak Elektron with 16.77 million shares.

Shares of 359 companies were traded on Wednesday, of which 47 registered an increase, 296 recorded a fall, and 16 remained unchanged.

Currency update

The currency market also came under similar pressure. Intra-day reports suggested the rupee crossed the 190-level against the US dollar in the inter-bank market for the first time in history. At close, the rupee settled at 190.02.