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Stocks dip 561 points on IMF bailout conditions

Updated February 12, 2019

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The cumulative loss since the index peaked out at 41,767 (intraday high on Feb 6) reaches 3.45pc.— AFP/File
The cumulative loss since the index peaked out at 41,767 (intraday high on Feb 6) reaches 3.45pc.— AFP/File

KARACHI: Stocks continued the falling trend for the fourth straight session on Monday with the KSE-100 index suffering a loss of 560.82 points (1.37 per cent) to close at 40,326.53.

The cumulative loss since the index peaked out at 41,767 (intraday high on Feb 6) reached 3.45pc.

The market opened on a positive note but later suffered intense volatility with investors remaining undecided between the risk of taking fresh positions due to attractive valuations and the fear of further fall in the absence of positive news flow.

In early trade, investors were optimistic believing that the International Monetary Fund (IMF) bailout was round the corner. But the finance minister clarified that the prime minister’s meeting with IMF chief Lagarde over the weekend was not a negotiation round and no deal was reached. It triggered selling as traders decided to reduce exposure in risky assets.

It was followed quickly by a fresh blow as Moody’s changed its outlook on Pakistan banking system to negative from stable, believing that banks would see their credit profiles challenged by high exposure to the low-rated sovereign debt and a slowing economy.

This caused panic selling among investors, resulting in a plunge towards 40,300 level. During the session, the index touched intraday high by 189 points and low by 669 points.

Selling was witnessed across the board, but commercial banks were the worst performing sector which wiped off 187 points, followed by exploration and production and fertiliser cumulatively chipping away 134 points.

Investor participation remained muted as volume fell by 21pc to 134m shares, while traded value declined by 27pc at $45.1m. Scrip-wise major contribution to the index downside came from Habib Bank, down 2.46pc, Lucky Cement 2.62pc, United Bank 2.14pc, Oil and Gas Development Company 1.55pc and MCB 1.60pc, taking away 185 points.

Published in Dawn, February 12th, 2019

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