KARACHI: Stocks fell like ninepins on Wednesday as the KSE-100 index opened deep in the red. As worried investors tried to comprehend if the market reversal was after a dead cat bounce a day earlier, the index kept sinking until it hit the intraday low by 358 points.

Many market men thought that the foreign investors might be reshuffling allocations in the emerging markets, resulting in heavy sell-off. But the figures provided in the evening by the National Clearing Company of Pakistan cleared up the mystery. It showed selling of equities in the massive sum of $10.71m by mutual funds. This was on top of the first major offloading of stocks worth $6.98m by the funds, a day ago.

The index closed with a loss of 226.29 points, or 0.49 per cent, at 45,676.94.

The mutual fund industry, which holds Rs694bn assets under management, has come to occupy the place of biggest market player, replacing the stockbrokers.

A fund manager of a mid-sized equity fund said on condition of anonymity that at least three big funds were selling off shares to realise cash for heavy redemptions by a major pension fund.

He, however, affirmed that the market had shown resilience as sizeable liquidity was wiped off by individual and institutional investors who seized the opportunity to buy at dips.

Investors preferred switching to food, chemical and power sectors as safe haven. The major scrips that dented the index included OGDC (35 points), Hubco (33 points), Engro (30 points), MCB Bank (25 points), and PPL (23 points).

The traded volume was down 3pc over the previous day to 476.6mn shares. Second-tier stocks in the lead of Silk Bank Ltd trading in 43m shares, were the volume leaders. Regardless of the overnight price hike in international oil prices, profit-taking was witnessed in Pakistan Oilfields, Pakis­tan Petroleum and OGDC.

Ahead of the monetary policy announcement on Friday, banking stocks closed mixed.

Published in Dawn, January 21st, 2021