KARACHI: Broad-based sell-off akin to a bloodbath was witnessed at the stock market on Wednesday where the KSE-100 index went into a free-fall dipping intraday by as many as 1,221 points.
Investors were rattled as the index continued to dip deeper in the red, prompting them to be the first to dump equities and seek the shelter of capital protected investment avenues. Finally, as panic subsided and the market started to calm down before the end of trading hours, the index recovered some of the lost ground on value buying and closed with a loss of 412 points, or 0.89pc, at 45,597, yet knocking of another support level of 46,000.
Marketmen tried to figure out the reasons for extreme volatility, which is convincing only in varying degrees. One said that the selling pressure had built up due to geopolitical tension and uncertainty on macro level. Others linked it to the roll-over week and uncertainty over the IMF meeting to be held in first week of October. Brokerage AHL Ltd stated: “Leveraged positions of retail investors played havoc on market today, which received margin calls after continuous declines witnessed in the index for the past couple of sessions’.
Raza Jafri, Head of Equities at Intermarket Securities, thought there was method in madness. He observed that the index had lost nearly 600 points towards the end on Tuesday session and the pressure on Wednesday was an extension by investors who were desperate to seek exit in early trade.
He thought that the selling may have been exacerbated by redemptions at mutual funds. “However, value buying came in at dips and encouragingly enabled the index to recover about two-thirds of its intraday losses towards the end of trading session”.
Sector-wise, major falls were recorded the heavy-weight technology and E&P sectors. Shares on the fertiliser, refinery, cement, steel and banks also came under pressure. Stocks that were major laggards included TRG (38 points), System (38 points), HBL (25 points), UBL (20 points) and CHCC (16 points).
Published in Dawn, September 23rd, 2021
