KSE-100 retreats nearly 1.5% over political uncertainty

Ongoing political and economic uncertainty dented investor sentiment at the Pakistan Stock Exchange (PSX) as the benchmark KSE-100 Index witnessed a decline of over 600 points, closing below the 40,000 level on Monday.

Moreover, panic about the monetary policy announcement by the State Bank of Pakistan (SBP) due next week added to investors’ anxiety.

At the end of the session, the KSE-100 Index fell 602.7 points or 1.49% to close at 39,720.75 points.

KSE-100 Index falls 1.18% owing to political noise

Trading began with a dip and the market fell steadily throughout the day. In the second half of the session, the decline accelerated.

Across-the-board selling pressure was seen as index-heavy sectors including, automobile, cement, chemicals, commercial banks, oil & gas exploration companies, and oil & gas marketing companies ended the day in the negative zone.

Experts attributed the bearish sentiment to political uncertainty amid local government elections held on Sunday across Sindh, including Karachi and Hyderabad.

“Negative sentiment is due to political volatility,” Sana Tawfik, an analyst at Arif Habib Limited (AHL), told Business Recorder.

“Until clarity is achieved on the political front, negativity will persist,” she added.

She said dampened investor sentiment is also due to the upcoming Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP), which is scheduled to meet on Monday (23 January).

“The market is expecting a rate hike in the upcoming MPC,” said Tawfik, which is positive news for banking sector. “However, they too are not performing because political uncertainty is outweighing other factors,” she added.

The delay in declaration of results for local bodies elections in Sindh has raised concerns over the transparency of the electoral process and the performance of the Election Commission of Pakistan (ECP).

The ECP said on Monday that it takes time to prepare the results and “the process is complicated”.

Meanwhile, both the Jamaat-e-Islami (JI) and the Pakistan Peoples Party (PPP) claimed their victory in the polls, while the MQM-P said “low voter turnout” was the victory of its decision to boycott the elections.

Sindh Minister for Labour Saeed Ghani has said that the Pakistan Peoples Party (PPP) will hold talks with all parties competing in the polls except Pakistan Tehreek-e-Insaf (PTI) regarding who will be mayor of Karachi.

A report from Capital Stake stated that bears dominated the PSX on first trading session of the week.

“Indices traded in red for most part of the day with the benchmark KSE-100 Index closing below the 40,000 mark while volumes fell from previous close,” it said. “Dissolution of the Punjab assembly paired with the anticipation of an increase in policy rate, caused the investors to panic.”

On the economic front, government decided to keep the petrol prices unchanged at Rs214.80 for last days of January.

Moreover, Pakistan’s rupee registered a fall against the US dollar for the 19th consecutive session, depreciating 0.08% or Re0.19 to close at 228.34.

Sectors dragging the benchmark KSE-100 Index downwards included oil and gas exploration (132.04 points), technology and communication (99.54 points) and cement (63.15 points).

Volume on the all-share index fell to 105.5 million from 173.3 million on Friday. The value of shares traded fell to Rs3.2 billion from Rs4.6 billion recorded in the previous session.

WorldCall Telecom was the volume leader with 8.96 million shares, followed by Hascol with 7.84 million shares, and Lotte Chemical with 7.66 million shares.

Shares of 314 companies were traded on Monday, of which 65 registered an increase, 228 recorded a fall, and 21 remained unchanged.