Stocks battered as index plummets 846 points in intra-day trading

KARACHI: 

Stocks were hammered on Friday as the KSE-100 index plunged 846 points in intra-day trading, slipping below the 37,600 mark. Participants reacted to the sharp dip in the foreign exchange reserves held by the central bank, which had slipped by $101 million to settle at $8.3 billion.

IMF cautions Pakistan against increasing Chinese involvement in economy

The foreign exchange reserves have been on a downward path for seven successive weeks.

The KSE-100 index, a benchmark for market performance, was down 846.23 points or 2.20% hovering at 37,552.07 before the market took a mid-day break.

Commenting on the situation, Arif Habib Limited Head of Research Saad bin Ahmed told The Express Tribune, “Foreign selling on specific counters is of course a leading reason behind the current downturn.”

Besides, local financial institutions are also seen offloading a part of their holdings across the board.

He said that heavy selling by foreign and local financial institutions was seen mainly in auto, banks and cement stocks.

“They are in the phase of resetting their portfolios on negative economic outlook for two years,” Ahmed added.

IMF mission to arrive in coming weeks for bailout talks

In an earlier development, Pakistan has also formally approached the International Monetary Fund (IMF) for a bailout. IMF Managing Director Christine Lagarde announced on Thursday that she would send a mission to Pakistan for bailout negotiations amid emphasis on full disclosure of the debt Pakistan has acquired including from China.

The analyst pointed out, “Every one is foreseeing rebound in the market any moment. But at the same time everyone is selling as well to repurchase stocks at lower levels.”

The confusion on IMF bailout as to the amount of loan Pakistan has applied for has also remained a confusion in the market.

Earlier, there were talks that Pakistan would apply for $8-12 billion in bailout. Now market talks suggest the amount would be around $6-7 billion.

“If Pakistan receives low amount in bailout, the problem of current account balances may remain there in the medium run.”

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