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Stocks tumble 938 points on tax concerns

Updated June 11, 2019

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The KSE-100 index opened in the red by 140 points and within minutes it sank 500 points. — AFP/File
The KSE-100 index opened in the red by 140 points and within minutes it sank 500 points. — AFP/File

KARACHI: Stocks were possessed by the fear of Federal Budget 2019-20 that sparked investors’ panic as the expected bewildering harsh budgetary measures unfolded for the whole day. Concurrently, the rupee depreciated further against dollar, all of which prompted participants to dump equities, at whatever the available price and seek the safety of fixed income securities.

The KSE-100 index opened in the red by 140 points and within minutes it sank 500 points. As selling spread across the board, the index dipped to intraday low by 1,037 points and closed with a final loss of 937.74 points (2.64 per cent) at 34,567.55.

The euphoria over the launch of market support fund which had kept investors’ hopes alive last week failed to hold interest as they realised that besides some delay in its materialisation, the liquidity inflow of Rs20 billion may not be enough to absorb the selling linked to the budget.

On the political side, the rejection of Asif Ali Zardari’s permanent bail by the Islamabad High Court further aggravated matters. Investors also anticipated the economic survey expected to be released in the afternoon to paint a bleak picture of economy given the deterioration in macro statistics.

The volume declined 26pc to 92 million shares from 125m while traded value also dipped 26pc to reach $23.5m as against $31.6m. Stocks that contributed significantly included K-Electric, Bank of Punjab, Unity Foods, Lotte Chemical and Oil and Gas Development Company (OGDC), which formed 40pc of total turnover.

Banks, exploration and production (E&P) and fertiliser sectors led the laggards, with cumulative negative contribution of 519 points. Cement stocks also tumbled as the sector lost 104 points with DG Khan, Maple Leaf, Cherat and Pioneer all hit their lower circuits while Lucky lost 4.7pc.

Among banks, National Bank closed limit down, while Habib Bank fell 3.1pc and MCB shed 2.4pc. On E&P, Pakistan Petroleum shed 3.2pc, Pakistan Oilfields 3.5pc and OGDC 3.2pc.

Published in Dawn, June 11th, 2019