Stocks tumble as politics turns violent

KARACHI: Stocks fell on Friday after a clash between the government and opposition supporters set off a massive selling spree amid a rupee nosedive, traders said.

Pakistan Stock Exchange (PSX)’s benchmark KSE-100 Shares Index shed 777 points or 1.77 percent to settle at 43029.97 points.

JS Research pinned the plunge on political uncertainty that spurred a profit-taking spree across the board.

The brokerage does not see the trade to buck the trend anytime soon and recommend investors to avail any downside as an opportunity to buy in the banking and exploration and production sectors.

Ahsan Mehanti, analyst at Arif Habib Corp, said stocks closed sharply lower on concerns over rupee plunge to record low and political uncertainty.

Ballooning current account deficit and record high import bills owing to a heating commodities supercycle remained a cause of constant worry for investors.

After some agitational developments on the political front, scares of nationwide anarchy gripped the market and as a result investors thronged the exits to ditch risky assets.

Ready market volumes, which continued to remain thin, however, improved to 180 million shares from 148 million in the last session, while traded value increased to Rs6.932 billion against Rs2.995 billion in the previous session.

The market capitalisation, on the other hand slipped to Rs7274 billion from Rs7404 billion of the last trading session.

The average weekly traded volume and value remained the lowest since November 2020 and October 2019 respectively. Stocks that contributed significantly to the volumes include WTL, GGL, KEL, and PAELR3.

Topline Securities, in its daily market review, attributed the lackluster trade to political upheaval.

“The market remained under immense pressure owing to political noise,” the brokerage said.

Apart from the mounting political uncertainty, exclusion of SNGP, KACP, and FCCL from FTSE small cap index worsened the situation further in the last trading hours.

Arif Habib Limited in its post-trading note said stocks suffered a bloodbath because of political unrest and further devaluation of rupee against dollar.

Dullness prevailed in the first session, but across-the-board selling ensued in the second, mostly owing to weekend effect; however, some foreign activity was observed because of FTSE rebalancing, the brokerage said.

Sectors that weighed the most on the index included banks (-158.3pts), technology (-150.3pts), exploration and production (-140.4pts), cement (-113.1pts), and oil marketing companies (-54.3pts).

Analysts say country’s economic vulnerability has increased manifold because of endogenous and exogenous risks. While political instability that followed the no-confidence motion against Prime Minister has flared up economic uncertainty, deteriorating investor morale.

The consequential effects of ongoing political unrest pose internal and external risks and can escalate further by the end of March 2022.

The top companies reflecting significant growth in the ready market included WorldCall Telecom, Ghani Global Holding, K-Electric, Pak Elektron, Telecard Limited, TRG Pakistan Ltd, Sui Northern Gas, TPL Properties, Cnergyico Pk, and Fauji Cement.

Large Scale Manufacturing (LSM) grew 7.6 percent during the first seven months of the current fiscal year as compared to the corresponding period of last year.

The growth of LSM in January 2022 hit 8.2 percent over the same month of the last year and 4.2 percent over the February 2022. Of the total 335 traded scrips, the value of 64 increased, 256 decreased, and the share prices of 15 stocks were unchanged.