After an initial selling bout, buying momentum returned to the Pakistan Stock Exchange (PSX), with the benchmark KSE-100 Index gaining over 1,100 points during intra-day trading on Monday.
Earlier in the session, the benchmark index lost over 1,000 points amid selling driven by the banking sector.
However, the market managed to brush off the negative sentiments. By 12pm, the benchmark index was hovering at 110,163.70, an increase of 1,109.75 points or 1.02%.
Buying was observed in key sectors including automobile assembler, cement, fertilizer, oil and gas exploration companies, and OMCs. Meanwhile, the banking sector remained under selling pressure.
Index-heavy stocks including ENGRO, OGDC, PPL, PSO and HUBCO traded in the green.
Market experts attributed the earlier downturn 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 media.
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.
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
American Dollar Exchange Rate