KARACHI: Stocks plunged on Monday with the KSE-100 index recording a steep drop of 786.72 points (2.27 per cent) to close at 33,824.51. The benchmark, which started out in the negative, remained in the red throughout the session as it mirrored the disappointment of investors’ over the federal budget.

Brokers said the budget ignored all the demands of the exchange which were required to encourage investors to enter the equity market.

“A few relief measures announced mainly for the real estate industry and reduction of duties in import of raw materials for couple of sectors were not good enough to attract investors as they expected major tax cuts and incentives in the face of the pandemic,” said the head of a brokerage firm who also contested other contents of the budget, including the ambitious tax collection target of Rs4.96 trillion for FY21.

Investors were also spooked by the announcement of the Punjab health minister who hinted at the lockdown of several areas in Lahore for 15 days after exponential increase in Covid-19 cases and the death toll in the province on the rise.

The negativity was exacerbated by sell-off in global markets on fears of a second wave of pandemic. Investors were driven away also by the decline in international oil prices that led the exploration and production stocks into the red. Along with them, banking was another major sector that dragged the index down.

Profit-taking was seen across the board but foreigners in a major move swooped to pick up stocks worth $1.09 million. Among local participants, banks and mutual funds sold shares but the liquidity was absorbed by long-term individual value investors. The volume jumped 48pc over the previous session to 263m shares while traded value in­­creased 31pc to reach $50.2m.

Scrips that contributed the most to index downside included MCB, declining by 3.4pc, Oil and Gas Deve­lop­ment Company 3.1pc, Lucky Cement 3.3pc, United Bank 3.7pc, Engro Corporation 2pc, Pakistan Petroleum 2.8pc, Hub Power 2.7pc and Habib Bank 1.8pc.

Published in Dawn, June 16th, 2020