Bulls managed to grab a hold of the trade floor after three days as shares at the Pakistan Stock Exchange (PSX) managed to climb nearly 3,000 points on Friday in intraday trade.
The surge comes a day after the benchmark KSE-100 index suffered the largest single-day point-wise loss of 3,790 points on unabated across-the-board selling pressure.
The KSE-100 index climbed by 2,996.39, or 2.82 per cent, to stand at 109,271.36 points from the previous close of 106,274.97 at 2:39pm.
However, failing to sustain the rally, shares plunged further in intraday trade, standing at 108,189.52 points, up by 1,914.55 from the previous close.
The index lost over 5,000 points or 4.4pc in the previous two sessions post-rate cut, which could be classified as nervous selling if it was called panic-offloading despite positive economic indicators.
Tahir Abbas of Arif Habib Ltd (AHL) told Dawn yesterday that the correction was healthy since the market had consistently set records in recent weeks.
Bears had maintained control of the stock market for three days following the State Bank of Pakistan (SBP)’s announcement of a 200bps rate cut, coupled with guidance indicating a likely modest uptick in inflation in the coming months.
On Monday, SBP had reiterated that core inflation, which stood at 9.7pc, was “proving to be sticky, whereas inflation expectations of consumers and businesses remain volatile”, decidin on a cautious key interest rate cut of 200bps amid demands of a major rate cut.
Yesterday’s bearish momentum was attributed to a National Assembly bill aimed at targeting non-filers and restricting their ability to invest in mutual funds or maintain bank accounts, creating concern among investors.
However, analysts had assured that such broad-based compliance would ultimately benefit the equity market in the long run and is unlikely to have a significant impact on investment flows in the medium term.
Moreover, analysts had also attributed the decline to “stock-specific selling due to overvaluation concerns”.
More to follow
