KARACHI: Stocks tumbled on Monday with the KSE-100 index sinking all the way down by 946.60 points (2.79 per cent) to close at 32,944.48, its lowest level since May 28, 2015.

Investors’ spirits remained crestfallen as they saw this year’s gains melting down to just 3pc. When the dust settled at the end of the day, a sum of Rs206 billion had been washed away from the market capitalisation.

Traders said everyone expected the market to open on a bearish note as the sentiments had dampened due to last week’s loss of 556 points (1.62pc) amid uncertainty in regional markets and absence of key triggers.

The foreign investors, who were net buyers last week, were major sellers at the market on Monday as they recorded net portfolio outflow of $7.76 million.

They were followed by nervous local mutual funds who sold shares worth $6.91m due to their stop-loss limit on ‘capital protected funds’. Surprisingly, the local individuals opted to build portfolios as they absorbed much of the selling through net purchases of $8.01m worth shares.

A trader said the selling frenzy had been sparked by the belief that some big brokers were under scrutiny of the law. But Arif Habib, a former chairman of the KSE, dispelled such a notion.

He told Dawn the SECP and NAB was hounding defaulter brokers who had misappropriated clients securities and made good their escape. He agreed that the KSE was devising plans to more closely monitor client margins. “Both these steps are healthy for the market,” Habib asserted.

Samar Iqbal of Topline Securities said the dwindling volume was also a cause of concern for speculators as it touched a 10-week low of 218m shares of trading value of Rs10.6bn. At present, the average volume this year is 286m shares and value Rs13bn.

Raza Jafri, executive director research at Intermarket Securities, said that in the absence of credible source of news, the market was in the hands of speculators. “Weak sentiments triggered panic selling,” he said, and argued that political, economic and company fundamentals did not warrant a huge fall.

Analyst Arhum Ghous of JS Global also related the bloodbath to rumours “circulating in the market about the regulators’ serving notices and demanding explanations from various capital market participants”.

Margin calls also contributed towards negative sentiments. Cement and fertiliser sectors remained under pressure due to expectation of unchanged policy rate in the upcoming monetary policy, said the analyst. FCCL, MLCF, FFBL, Engro Fertiliser closed down by 2.7pc, 5pc, 2.2pc and 3.5pc, respectively.

“The oil sector remained depressed as the health of global economy fuelled concerns that a supply glut may stick around for longer than anticipated. POL, OGDC, PPL fell by 2.3pc, 3.9pc and 5pc, respectively.”

Published in Dawn, September 8th, 2015

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