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Stocks plunge 498 points to hit three-year low

Updated April 24, 2019

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A stockbroker looks at share prices on a computer monitor during a trading session at the Pakistan Stock Exchange (PSX) in Karachi on April 23, 2019. — AFP
A stockbroker looks at share prices on a computer monitor during a trading session at the Pakistan Stock Exchange (PSX) in Karachi on April 23, 2019. — AFP

KARACHI: Stocks tumbled on Tuesday and extended the earlier day’s decline as the investors’ faith in the prevailing economic situation hit rock bottom, taking its toll on the market. The KSE-100 index spiralled downwards by 497.66 points (1.35 per cent) and hit nearly three-year low at 36,404.03; last seen at that level on May 31, 2016.

While the mutual funds dumped stocks worth $3 million, partly to save the capital-protected fund and partly to meet some resumption requests, the foreign investors thought “blood on the street” as the time to buy and picked up stocks valued at $4.3m. Local institutions generally remained on the sidelines but panic struck the individual investors.

The change at the head of the finance ministry raised spectre of a delay in the International Monetary Fund package, despite the assurance of smooth talks with the Fund by the incumbent adviser. Investors were spooked by the possibility of further monetary tightening, rupee devaluation and hike in gas and electricity prices along with heavy additional taxes to address the fiscal concerns ahead of the bailout and more burden that may be piled on the industries in the upcoming budget.

“All of that can hugely impact the corporate profitability,” said a manager of mid-sized mutual fund. The usual selling pressures of the rollover week made matters worse.

The volume declined 5pc to 120m shares, from 126m shares while traded value increased by 13pc to reach $35.4m. Major drag on the index came from the cement, banking and fertiliser sectors with cement witnessing massive activity and lost 58 points on investors’ nervousness over the market share and its allocation between the north and south zones.

Major contribution to the index downside came from Habib Bank, lower by 1.71pc, Dawood Hercules 3.84pc, Engro Corporation 1.21pc, Lucky Cement 2.16pc and Oil and Gas Development Company 1.15pc, taking away 131 points. On the flip side, MCB was up 0.26pc, Murree Brewery 1.55pc and United Bank 0.17pc, adding 10 points.

Published in Dawn, April 24th, 2019