After weeks of sustained buying momentum, selling pressure was witnessed at the Pakistan Stock Exchange (PSX), with the benchmark KSE-100 Index losing over 1,000 points during the opening hours of trading on Monday.
At 10:05am, the benchmark index was hovering at 108,022.19, a decrease of 1,031.76 points or 0.95%.
Selling was witnessed in key sectors including commercial banks, oil and gas exploration companies, OMCs and power generation. Index-heavy stocks traded in the red, including OGDC, PPL, SSGC, SGNP, HBL, MCB, MEBL, NBP and UBL.
Market experts attributed the downturn primarily to the government’s decision to form a high-level committee to resolve the issue of Advances to Deposit Ratio (ADR) in the banking sector.
“Uncertainty regarding the alternative mechanism the committee might propose is weighing on investor sentiment,” Sana Tawfik, Head of Research at Arif Habib Limited (AHL), told Business Recorder.
Under the Terms of References (ToRs), the committee shall review the existing legal framework of fiscal measures related to ADR of banking sector. It would also deliberate on alternate fiscal schemes to tax bank profits accrued from investment in government securities.
“Additionally, profit-taking is also contributing to the market decline,” Tawfik added.
During the previous week, PSX continued its record-breaking trend and hit new historic highest ever levels with impressive gains and high trading activities on the back of strong interest of local investors coupled with institutional support on expectations of further decline in interest rate after declining inflation in the country.
The benchmark KSE-100 index surged by 7,696.63 points or 7.6% on a week-on-week basis and closed at 109,053.95 points.
Globally, Asian shares struggled with a slide in South Korea on Monday ahead of a packed week of central bank meetings that should see borrowing costs take a step lower, while US inflation data are the last hurdle to further policy easing there.
Chinese figures out on Monday showed the consumer price index fell a surprisingly large 0.6% in November, pulling annual inflation down to just 0.2% and underlining the need for more drastic policy stimulus.
Political tumult in France and South Korea was joined by the fall of Syrian President Bashar al-Assad’s regime, which complicated an already fraught situation in the Middle East.
Still, the mood was generally upbeat after US November payrolls showed enough of a recovery to assuage concerns of a slowdown, but not so much as to forestall a rate cut from the Federal Reserve next week.
The US consumer price report is out Wednesday and the core is seen holding at 3.3% for November, which should be no impediment to an easing.
This is an intra-day update
Source: Brecorder
