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Market watch: Political turbulence returns to haunt stock market

KARACHI: The stock market continued its downward spiral on Tuesday, shedding another 485 points, due to drastically reduced activity from local investors.

The KSE 100-share Index fluctuated at the beginning of the day and then stayed in the red zone throughout most of the trading session as political events dampened investor interest.

Pakistan Awami Tehreek Chairman Tahirul Qadri’s arrival in Lahore and former Prime Minister Nawaz Sharif’s march through the Grand Trunk road towards Lahore were increasing anxiety among investors, especially local players, over possible clashes, leading to a political crisis.

The benchmark KSE 100-share Index recorded a fall of 485.96 points or 1.05% to finish trading at 45,979.70.

Elixir Securities, in its report, stated Pakistan equities closed another day in the red amid lacklustre trading as domestic politics crawled back up on the radar.

“Activity in the wider market dried up with the KSE All-share Index recording a tally of just over 200 million shares, down 15% from yesterday (Monday) and 41% from last week’s average,” it said.

The market opened and traded sideways until afternoon followed by a steady dip afterwards as domestic politics weighed in and dragged the index below 46,000 points.

“Local investors reportedly remained side-lined and traded cautiously as cleric Tahirul Qadri came back in the limelight on his return to the country and former prime minister declared he would march along the GT road towards Lahore,” Elixir said.

Notably, on the leader board, Pakistan State Oil (PSO, +5%) contributed most points to the KSE-100 index as it hit its upper price limit at the market’s opening after announcing surprising earnings and pay-out.

“We see lacklustre activity to continue this week with domestic politics acting as a major dampener and keeping gains in check with foreign investment key to setting the direction in the days ahead despite the earnings season,” the report added.

JS Global analyst Maaz Mulla said the KSE-100 index likely plummeted owing to the political noise, shedding 486 points to close at 45,980.

Heavyweight stocks in the commercial banking sector dragged the KSE-100 index down by 56 points. United Bank (-1.49%), Habib Bank (-0.74%), Allied Bank (-1.02%) and National Bank (-0.33%) were among major laggards of the sector, he said.

“Volumes remained lacklustre as 206 million shares changed hands. Summit Bank (-15%) led the market volumes with 27 million shares. Askari Bank (-4.39%) also shed points in the trading session as the bank announced earnings per share (EPS) of Rs2.28 for the first half of 2017.”

On the other hand, PSO (+5%) hit its upper circuit as the company announced dividend per share of Rs15 (FY17: Rs25) with 20% bonus shares in its FY17 results. Pakistan Oilfields (+1.20%) and Pakistan Petroleum (+0.19%) in the oil exploration and production sector gained points against market sentiment as oil  in the global market steadied after news of lower crude supplies from Saudi Arabia.

The steel sector also lost points due to selling pressure where International Steels (-4.79%), Amreli Steels (-3.63%) and Aisha Steel Mills (-3.93%) were losers in the sector.

“We expect volatility in the market and recommend investors to stay cautious as long as political chaos prevails,” he added.

Overall, trading volumes fell to 205 million shares compared with Monday’s tally of 241 million.

Shares of 384 companies were traded. At the end of the day, 75 stocks closed higher, 295 declined while 14 remained unchanged. The value of shares traded during the day was Rs8.83 billion.

Summit Bank was the volume leader with 27 million shares, losing Rs0.66 to close at Rs3.70. It was followed by K-Electric with 17.6 million shares, losing Rs0.39 to close at Rs6.91 and TRG Pakistan with 16.1 million shares, losing Rs0.18 to close at Rs43.45.

Foreign institutional investors were net sellers of Rs381 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.

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