Market watch: KSE-100 plummets 605 points as rupee and sentiment take a hit

KARACHI: The KSE-100 Index endured another plunge on Monday as the rupee’s fourth round of devaluation and an increase of 100 basis points in the key interest rate took toll on market sentiment.

Monday kicked off with the currency weakening against the US dollar, going as low as Rs128 in intra-day trading. A 100 basis-point rate hike on Saturday, which took the key interest rate to 7.5%, also contributed to the negative sentiment. The two steps are being seen as the authorities’ way of curbing aggregate demand in the backdrop of falling foreign exchange reserves and a rising import bill.

After a positive open, the KSE-100 came under heavy selling pressure as the rupee weakened as well. The index fell 875 points in intra-day trading before value hunters took the opportunity to take long-term positions.

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At close, the KSE-100 finished with a decrease of 605.23 points or 1.50% to settle at 39,665.77.

Elixir Securities’ analyst Murtaza Jafar said equities closed deep in the red with the KSE-100 Index slipping by as much as 1.5%.

“Market had a positive start on the back of gains in index-heavy financials after a 100-basis-point hike in the monetary policy over the weekend,” commented Jafar.

“However, it couldn’t sustain the gains for long as reported foreign institutional investor selling in the sector dragged the market into red zone. As the day progressed, a drop in the PKR against USD to Rs128 took the market off guard as most steel, autos and cement names witnessed renewed selling pressure by local funds on concerns of lower than expected earnings in fiscal year 2019.

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“[We] expect a volatile market till the elections while our chartists seeing major support near 39,200-39,000 levels,” he added.

Overall, trading volumes increased to 147.5 million shares compared with Friday’s tally of 124.7 million. The value of shares traded during the day was Rs6.1 billion.

Shares of 348 companies were traded. At the end of the day, 83 stocks closed higher, 236 declined while 29 remained unchanged.

Bank of Punjab was the volume leader with 25.2 million shares, losing Rs0.18 to close at Rs11.96. It was followed by Fauji Cement with 10.5 million shares, losing Rs0.98 to close at Rs19.24 and BankIslami with 9.1 million shares, gaining Rs0.32 to close at Rs12.37.

Foreign institutional investors were net sellers of Rs1.16 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.

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