KARACHI: Stocks tumbled more than 1.6 per cent or 474.65 points on Wednesday as ‘banks’ were believed to have resorted to heavy profit-taking in key stocks.
The KSE-100 index closed at 28,717.19 points. ‘Banks’ sold shares valued at $5.57 million and ‘mutual funds’ followed, offloading stocks worth $3.68m, which market watchers said was to meet redemptions. The index showed some recovery in the last hour after it had hit the floor to an intra-day loss of 600 points.
The selling pressure was so intense that heavy buying of $8.45m worth stocks by foreign investors on Wednesday failed to put a floor under the stocks fall.
Some fund managers contacted at the close of the market were at a loss to give a reason for the sharp decline, considering that the liquidity with banks was likely to improve with a record Rs4.25bn to be received from the auction of licences.
A senior stock broker, however, thought that the investor sentiments may have dampened over the issue of further shares by the government in PPL, OGDC and UBL, which would have a combined value of Rs1.8bn.
“Investors’ concern is that the government will offer those stocks at discount to market price,” he said.
Samar Iqbal, Assistant Vice President, Topline Securities, commented that ignoring opening of 3G/4G spectrum auction and announcement of 3 consortia for OGDC, PPL and UBL privatisation, institutional investors’ profit-taking in index heavyweights pushed benchmark index down by 1.6pc.
Lower than expected corporate results also forced investors to trim their holdings.
PSO closed at ‘lower circuit breaker,’ MCB declined by 1.3pc and UBL lost 4pc.
Engro Fertiliser and Engro also dropped after lower than expected earnings announcement by Engro Fertiliser.
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