‘Overdue correction’: KSE-100 plummets below 79,000 after nearly 1,600-point loss

Selling pressure persisted throughout the trading session at the Pakistan Stock Exchange (PSX) on Monday with the benchmark KSE-100 Index falling below the 79,000-point level after nearly a 2% loss that was triggered by rising political uncertainty in the country.

At close, the KSE-100 settled at 78,539.19, a loss of 1,578.70 points or 1.97%, amid lower volume.

There was little to no recovery after the benchmark index hit an intra-day low of 78,404.76, and comes on the back of a massive fall on Friday as well when the KSE-100 decreased over 2% as well.

The negative sentiment carried over the weekend and pushed the index lower with across-the-board selling including in sectors such as automobile assemblers, cement, chemical, commercial banks, oil and gas exploration companies as well as OMCs.

Index-heavy stocks including OGDC, PPL, PSO, SHEL, SSGC, HBL, MCB and NBP traded in the negative.

Experts say the sentiment comes amid rising political tensions as government mulls banning the opposition Pakistan Tehreek-e-Insaf (PTI).

However, many also believe a correction was long overdue as the KSE-100 had been on a winning run ever since the budget saw no new taxes on the capital market.

Investors will now be closely following developments on the political front but some attention would also divert to the upcoming monetary policy announcement that has reportedly been scheduled for July 29 (Monday). An official schedule has not yet been issued by the central bank till this report was finalised.

Globally, Asian shares tread cautiously on Monday ahead of a packed week of corporate earnings that should test the sky-high valuations of tech stocks, while investors hope a key reading in US inflation will narrow the odds on a September rate cut.

Investors seemed well-prepared for news US President Joe Biden had dropped out of the election race and endorsed Vice President Kamala Harris for the Democratic ticket.

Markets took the news in their stride, with S&P 500 stock futures edging up 0.3%, while Nasdaq futures added 0.5%. Futures for 10-year Treasuries rose 3 ticks, while 10-year bond yields dipped 2 basis points to 4.22%.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2%, having shed 3% last week amid a general risk-off mood. Japan’s Nikkei lost 0.6%, and South Korea’s benchmark index was down 0.4%.

Meanwhile, the Pakistani rupee registered a marginal decline against the US dollar, depreciating 0.06% against the US dollar in the inter-bank market on Monday. At close, the currency settled at 278.30, a decrease of Re0.17 against the greenback.

Volume on the all-share index decreased to 375.6 million from 479 million a session ago.

The value of shares declined to Rs19.35 billion from Rs27.85 billion in the previous session.

K-Electric Limited was the volume leader with 33.44 million shares, followed by Pak Elektron with 23.56 million shares, and PIA Holding Company with 19.21 million shares.

Shares of 446 companies were traded on Monday, of which 80 registered an increase, 319 recorded a fall, while 47 remained unchanged.