KARACHI, Aug 1: The KSE-100 index plunged by 220.91 points or one per cent to 23,091.87 on Thursday as the stocks started to weaken in early trade, snapping the earlier day's recovery.

The stocks downfall was triggered by the declaration of Engro Food’s lower than expected 1H2013 earnings, at Rs1.46 per share, compared to Rs1.66 in the corresponding period last year.

It grounded Engro Food stock to 'lower circuit' of 5 per cent and caused a domino impact on the market where the parent company Engro Corporation also slumped 5pc pulling with it the other fertiliser Dawood Hercules stock.

The fuel to the fire was added by the July inflation (CPI) numbers that clocked in at 8.26pc, which marked 10-month high number and substantially higher than 5.85pc in June.

The figure beat the market consensus expectations of 7.9pc. The equities thus fell like ninepins across the board as most participants feared interest rate hike in the upcoming SBP Monetary Policy.

Cement stocks took the beating as most companies were known to be highly leveraged.

But even the banking sector, which should benefit from potential increase in interest rates, succumbed to the market pressure with stocks such as NBP down by 4.5pc and MCB lower by 1.1pc.

Some market participants thought that the investors may have also decided to book profit ahead of the long three-days holiday.

Among the institutional investors, companies sold stocks worth 2.28 million and in line with the recent trend mutual funds continued to liquidate positions, offloading stocks worth $4.62m on Thursday.

Apart from profit-taking, some of the 30-odd asset management companies were thought to be under pressure for redemptions.

Banks, individuals and other organisations were bullish on the stocks picking shares valued at $2.28m; $2.56m and $1.34m, respectively on Thursday.

Foreign funds also recorded net inflow of $0.98m.

Dealers at brokerage Sherman Securities said that higher than expected CPI numbers, implying an earlier increase in interest rates and expected increase in gas rates for industries, specially fertilisers, overshadowed government’s efforts to arrest circular debt in future through increase in power tariffs.

Analyst Ahsan Mehanti stated that higher global commodities and stocks failed to support investor sentiments.

Falling foreign exchange reserves, economic uncertainty and limited foreign interest played a catalyst role in bearish activity at KSE ahead of long week end holidays (Friday also being a closed holiday) despite support in selected textile stocks on expectation of strong earning announcements due next week.

Volume increased to 199 million shares on Thursday with the traded value also up at Rs8.994bn, from 141m shares valued at Rs7.258 that changed hands on Wednesday. Market capitalisation declined by Rs37bn to Rs5.675 trillion, from Rs5.712tr the earlier day.

In all, 365 shares came up for trading with 228 losers; 124 gainers and 13 stocks closing at their previous values.

On the top-10 volume leaders, PTC trading Spot, declined 30 paisa to Rs27.81 on 18m shares. It was followed by NBP down by Rs2.62 to Rs55.68 on 16m shares; Fauji Cement fell 18 paisa to Rs15.76 on 13m shares; SSGC rose by 64 paisa to Rs25.75 on 16m shares; Maple Leaf Cement dipped 72 paisa to Rs29.69 on 10m shares; Bank of Punjab lower by 55 paisa to Rs13.28; JS Investments rose by 81 paisa to Rs9.06 on 6m shares; SNGP shed 49 paisa to Rs25 on 5m shares; PIA edged lower by 2 paisa to Rs7.76 and Lafarge Cement Pak fell 24 paisa to Rs9.88 on 5m shares.