KARACHI: The investor confidence in equities hit rock bottom in the outgoing week, triggering panic selling that kept the benchmark KSE-100 index reeling down in all five trading days. The index sank by 1,772 points (4.32 per cent) during the week and settled at 39,226 points after breaking the psychological barrier of 40,000.

Investors were troubled by deteriorating economic indicators with the State Bank of Pakistan declaring further fall in foreign exchange reserves, which hit $8.4 billion, representing a four-year low. The steepest fall was seen on Friday when the index was hammered by 861 points, the biggest single day drop during the tenure of the sitting government and the third heaviest fall this year.

The major event to trigger the panic selling during the week was the statement released by the International Monetary Fund, highlighting serious concerns faced by Pakistan on the macroeconomic front and asking for further rupee devaluation, increase in interest rates and upward revision of energy tariffs.

Moreover, the Oil and Gas Regulatory Authority notified new sale prices of natural gas with effect from Sept 27, which put most sectors of the bourse under the hammer.

Already mowed down by economic troubles, the Index dived to intraday low by 1,057 points in the second session on Friday after investor fears were fanned by political uncertainty following the news of arrest Shahbaz Sharif on corruption charges. Further, the deferment of electricity rate hike and lack of direction on potential entry in to the IMF program kept activity suppressed.

Even the attractive multiples failed to entice participants where average daily volume shrank 9pc over the preceding week to 113.5 million shares. The average value traded dipped 15pc to $35m.

Foreigners dumped stocks worth $8.42m in the outgoing week, marking the 23rd week of outflows. Domest­ically, mutual funds recorded net selling of $4.8m.

Banking scrips failed to attract attention despite the 100 basis points rate hike by SBP as selling pressure prevented any positive returns.

Commercial banks saw the heaviest erosion of 525 points, followed by cement, lower by 217 points, oil and gas exploration companies 151 points, oil and gas marketing companies 146 points and fertilisers 116 points.

Scrip-wise, decliners were led by Habib Bank, down 145 points, MCB 105 points, United Bank 94 points, Lucky Cement 89 points and Oil and Gas Development Company 77 points.

Published in Dawn, October 7th, 2018