KARACHI, April 11: The hike in discount rate from 7.5 to 9 per cent resulted in a massive fall of 348 points or 4.59 per cent in the KSE-100 index, which closed at 7,244-point level. The market expected a positive change in investor confidence following assurances that SECP and the KSE had reached at some sort of consensus on the ‘netting’ issue. And the index, therefore, started on a positive note.

But it was in the middle of the day that the announcement regarding increase in discount rate from 7.5pc to 9pc, by the State Bank of Pakistan, hit the market like a bolt from the blue. “While general expectations were for a gradual increase in discount rates, the SBP decided not to spare any quarters by raising rates to 9pc from 7.5pc” which put scare in the minds of market participants, said analysts at stock brokerage firm Elixir Securities. The raise had come after two and a half years. Some analysts thought that the increase by the central bank had been made in order to curb inflationary pressures, though others wondered if the timing for such heavy rise was

perfect.

Share prices across-the-board plummeted with almost every notable stock closing at its lower circuit breaker. Those included PTCL, DGKC, POL, FFBL, PSO, PPL, OGDC etc. The stock values dropped like ninepins: first the energy sector, followed by banking and cement.

There was a strong belief among market participants that the phase out of ‘badla’ had not been so smooth and investors’ attraction towards margin financing was a little bit far away. Besides the increase in discount rates, quick changes in future rules also kept up the bear pressure.

The intensity of bearishness was such that out of the total actives only 34 stocks managed to end up on the higher side, while 331 finished in the negative zone; another 24 remained unchanged.

Trading volumes remained depressed and registered a fall of 22 per cent to 175 million shares, from last Friday’s 225 million shares.

All the leading shares suffered fresh fall under the lead of PSO; Pakistan Petroleum; Pakistan Oilfields; D.G.Khan Cement; PTCL, their fall ranging from Re 1 to Rs21.

Unilever Pak decreased by Rs27 at Rs1,475; the stock being traded SPOT; PPL lost Rs14.55 to Rs276.75 on 14.8 million shares. PSO ex-dividend dropped by Rs20.75 to Rs394 on 7.1 million shares and PPL down by Rs10.50 to Rs199.50 on 3.8 million shares. A few of the rising scrips included Valika Art up by Rs26 to Rs125 and Yousuf Textile better by Rs3.75 to Rs54.

FORWARD COUNTER: PSO-Apr dipped by Rs20.95 to Rs398.15 on 2.8 million shares, followed by POL which plunged by Rs14.65 to Rs278.35; PPL down Rs10.60 to Rs201.90.