KARACHI: Stock market came under tight bear hug on Thursday as panic gripped investors who decided to book profit in the lead of mutual funds.

The KSE-100 index lost 517.25 points or 1.63 per cent to close at 31,239.04. The confusion over the “clients’ cash” held by KASB Securities was the principal reason for an all-out sell-off.

Although portfolio inflows were recorded at $2.55 million, the mutual funds were ahead of the panic prone herd with net sale of $8.46m worth stocks.

“It is understandable for mutual funds to be at the edge of their nerves for they are accountable for safety of savings of large number of small investors,” explained one fund manager.

Analyst Muhammad Mobeen at JS Global stated that the index went South on Thursday as bears dominated the market throughout the day.

The negative sentiments in the market were exacerbated by the developments on the political front as fears of confrontation between the government and PTI ignited.

Analyst Ahsan Mehanti said that panic selling gripped KSE amid concerns for rising receivables in energy sector and unsettled suspension of major broker.

“Political uncertainty and dismal data on current account deficit rising to $1.76 billion for July-Oct 2014 played a catalyst role in bearish activity at KSE,” he said.

The news flow on Thursday included the government’s intention to reduce the prices of petroleum products next month; S&P’s Pakistan long-term rating maintained at ‘stable’; huge circular debts pilling up on the PSO’s books and the widening of current account deficit to $1.76bn.

It was noted that the cement sector reported the highest volume of 44.76m shares followed by banking sector 26.75m shares and media sector at the third slot with volumes at 26.71m shares.

Published in Dawn, November 21th, 2014