KARACHI: Panic struck the stock market on Wednesday as bears were let loose on the likely introduction of Treasury Single Account (TSA) that would result in transfer of government deposits from commercial banks to the State Bank of Pakistan (SBP).

The KSE-100 index tanked by 629.38 points (1.68 per cent) and closed at 36,752.57, representing the second highest single day decline in percentage terms in 2019.

Banking was the worst performer as it took away 245 points and investors in the sector dumped shares to cut losses.

Analysts at Topline Securities said: “It is a major negative development for banks in terms of systematic risk as total government deposits with commercial banks are around 13-14pc of total banking deposits. The possible implementation of TSA can lead to reduced net income for them.”

Market opened 5 points in the plus and rose to intraday gains of 37 points after which the selling pressure started building up, dragging the index down to intraday low by 690 points. Exploration and production and oil marketing companies cumulatively wiped out 104 points from the index. Pressure was also felt by the Cement sector.

Foreign investors remained aloof from the market while major selling of stocks worth $3.97 million emanated from mutual funds. Companies pumped liquidity into the market with purchases worth $3.30m.

The volume bounced back by 23pc to 173m shares, from 140m while traded value also increased by 5pc to $34.8m from $33.3m.

Stocks that contributed significantly included Bank of Punjab, Unity Foods (right share), Maple Leaf Cement, Trust Investment Bank and Lotte Chemical, which formed 54pc of total volume.

Scrip-wise, major contribution to the index downside came from Habib Bank, down 4.91pc, Hub Power 2.48pc, Oil and Gas Development Company 1.32pc, Bank of Punjab 7.39pc and Pakistan Tobacco 3.42pc, scrapping off 209 points. On the flip side, Pakistan Oilfields, up 0.80pc, Kohinoor Textile Mills 1.87pc and Nimir Resins 2.34pc added 15 points.

Published in Dawn, April 18th, 2019