KARACHI: The Pakistan Stock Exchange (PSX) further plun¬ged with the KSE-100 index sinking to intraday low by 504 points, before recovering to 40,007.69 points on Tuesday afternoon.
The market opened at 39,957.73 points, and later it went down to 39,455.33 points before making the recovery.
One of the important factors which have added more turbulence towards the red index is Indian and Pakistani troops exchanging fire in some areas along the restive Line of Control (LoC) in the disputed Himalayan region of Kashmir.
“Negative sentiments were witnessed across the board,” a report of Topline Securities stated for yesterday’s sharp decline of 824 points in the stock market to close at 40,008, down 2 per cent, adding the benchmark index barely managed to maintain the 40,000-points level as the rollover week had started.
Analysts were of the view that the bearish trend continued with full force on the back of multiple factors, including profit taking by both local and foreign investors.
The market yesterday began in a glum mood in the face of internal and external headwinds. With the previous week’s unsettling event of the former president Pervez Musharraf’s case still fresh in mind, more negatives poured in with not a very bright picture painted by the Financial Action Task Force response to Pakistan’s progress report and the watchdogs list of 150 additional queries.
In the last week, the Index witnessed massive fluctuations as the last Monday began on positive note but later encountered political uncertainties after the detailed judgement in the high treason case against former president Musharraf was issued by a special court, coupled with the news of a possible rise in India-Pakistan border escalations which forced investors to offload their positions.
On a weekly basis, the Index closed on a negative note after losing 83.6 points, and thrashing the seventh consecutive week successful streak to an end on Friday.
Analysts were of the view that due to the apparent setting up of a conflict between the government and the judiciary, investors preferred to sell off shares.
They observed slim chances of recovery in the market in the coming days and of the index crossing the 42,000-point barrier before the end of the year, as was earlier expected.
Before these uncertainties, the index was last seen trading above 41,000 points in February 2019. So far, the market has regained over 11,000 points after hitting a five-year low at 28,671 points in August 2019.
After amassing a run up of 10 per cent in the last month, the KSE100 index traded around the psychological level of 41,000 index points.
Major developments earlier were, firstly, inflow of $1.3 billion from Asian Development Bank (ADB) for budgetary support and to address power sector reforms, secondly, worker remittances during November which stood at $1.8 billion (up 9.4 percent as compared to the same month last year), thirdly, forex reserves reaching $16 billion, up by 0.4 percent on a weekly basis, excluding tranche received from ADB, and fourthly, the latest PIB auction that saw 10-yr PIB cut off below 11 per cent that was last seen in Oct.18.
Improvement on the external front together with stability in the Pakistani Rupee was expected to reassure foreign investors.
Meanwhile, inflationary readings are set to touch peak in January 2020 with an imminent interest rate cut to follow, domestic investors remain jubilant as well, he said.
Previously, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh had said the recent strong performance of Pakistan’s stock market was proof of “increasing investor confidence on stabilisation measures” employed by the Pakistan Tehreek-e-Insaf (PTI)-led government.
In a tweet, the premier’s aide had stated that the 14.9 per cent gain of the KSE-100 Index in November was the highest one-month return over the past six years.
“The KSE-100 index is up by 14.9% in November 2019, highest one month return after May 2013. Since 16 August 2019, the index increased by 36.6% (10,500 points),” said Mr Shaikh.
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