KARACHI: External factors took their toll on the stock market on Monday as news over the weekend about the US government penalising Habib Bank and Mari Petroleum’s secondary public offering caused the market to open gap down and contributed to thin investor participation.
The negative sentiment created by this information proved contagious as most stocks followed suit and declined significantly, wiping out gains made in Friday’s trading session.
At close, the benchmark KSE 100-share Index recorded a decrease of 667.53 points or 1.57% at 41,974.22 points.
According to Elixir Securities, Pakistan equities started the new week on a negative note with the benchmark index declining 1.6% and settling below 42,000 points with thin turnover.
“The market opened gap down in the morning due to the hefty penalisation of Habib Bank (HBL) announced before the start of the session. The news spooked investors and dented sentiments, resulting in the stock trading at 5% limit down while nearly 700,000 shares crossed off the market at an average price of Rs180/share ie 18% below Friday’s close.”
Mari Petroleum (-5%) too started the day limit down due to news over the weekend of the government deciding to offload its stake via a secondary public offering.
The wider market during the day skidded down and traded lacklustre as evident from just 103 million shares exchanging hands on the KSE All-share Index, down 43% from last week’s average.
“(We) expect market to remain under pressure and trade volatile, particularly during the current week, due to dearth of positive triggers in sight,” the report added.
JS Global analyst Maaz Mulla said the market opened on a negative note and continued to decline throughout the day to eventually close at 41,974, down 668 points compared to Friday.
“The day started with news about HBL (-5%) after the US State Department of Financial Services sent a notice to the bank seeking imposition of a penalty of up to $630 million, much higher than street expectations.”
The bank also decided to close its New York operations. This action had been taken due to significant breakdown of the risk management and compliance identified in the bank’s New York branch in 2015.
Mari (-5%) too opened at its lower circuit as news of its secondary offering spread in the market. The negativity in these index heavyweights caused negative sentiments in the market and other stocks also followed the decline, Mulla said.
Pakistan Petroleum (-1.87%), Pakistan Oilfields (-0.02%) and Oil and Gas Development Company (-0.22%) from the exploration and production sector all closed in the red zone on the back of a decline in US crude futures as refinery shutdowns caused by the hurricane Harvey dampened demand for American crude.
Key laggards – HBL, Mari, Millat Tractors (-4.9%) and Cherat Cement (-5%) – dragged down the KSE-100 index by up to 235 points.
“The bearish spell might continue as weak results of banks, cement and fertiliser companies have left investors disappointed. We recommend investors to make use of every opportunity to sell on strength in this falling market,” he added.
Overall, trading volumes fell to 103 million shares compared with Friday’s tally of 177 million.
Shares of 377 companies were traded. At the end of the day, 86 stocks closed higher, 266 declined while 25 remained unchanged. The value of shares traded during the day was Rs5.7 billion.
Azgard Nine was the volume leader with 12.7 million shares, losing Rs1 to close at Rs14.89. It was followed by TRG Pakistan with 11.4 million shares, losing Rs1.9 to close at Rs36.17 and Sui Southern Gas Company with 7.8 million shares, losing Rs0.05 to close at Rs37.58.
Foreign institutional investors were net sellers of Rs65 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.