In line with the trend in the preceding week, the stock market continued its descent on Monday and fell over 600 points owing to weak economic cues.

Poor economic data dented investor sentiment and allowed bears to dominate trading. The State Bank of Pakistan (SBP) on Friday released current account figures, which showed a deficit of $632 million in May 2021.

Moreover, the Financial Action Task Force (FATF) last week kept Pakistan in its grey list despite the country meeting 26 of the 27 conditions in the action plan and handed it over a new six-point action plan, keeping Islamabad exposed to global pressure tactics.

Adding fuel to the market’s slide, Minister for Planning, Development and Special Initiatives Asad Umar warned of a fourth wave of Covid-19 that indicated a further slowdown of the economy and hurt investor interest.

Owing to these negative triggers, market participants resorted to across-the-board selling due to which index-heavy sectors including cement, bank, exploration and production ended the day with substantial losses.

In the morning, following a brief open in the positive, the benchmark KSE-100 index entered the negative territory in initial hours. Throughout the day, the index fell at a steady pace on negative news flow.

At close, the benchmark KSE-100 index recorded a decrease of 601.01 points, or 1.26%, to settle at 47,002.35.

Arif Habib Limited, in its report, stated that the market dipped 701 points during the session and closed down by 601 points.

Financial year end closing for institutional investors (banks and mutual funds) prompted profit-booking, especially in the aftermath of a proposal by the MSCI to downgrade Pakistan Stock Exchange (PSX) from the Emerging Markets to Frontier Markets Index, which could possibly result in selling by foreign corporates.

Sectors contributing to the performance included banks (-191 points), cement (-106 points), oil and gas marketing companies (-53 points), exploration and production (-52 points) and textile (-45 points).

Individually, stocks that contributed positively to the index included TRG Pakistan (+22 points), Abbott Laboratories (+10 points), Thal Limited (+8 points), Allied Bank (+8 points) and Packages Limited (+8 points).

Stocks that contributed negatively were HBL (-69 points), Lucky Cement (-51 points), UBL (-43 points), Hubco (-33 points) and MCB (-24 points).

Overall trading volumes dropped to 655.1 million shares compared with Friday’s tally of 761.4 million. The value of shares traded during the day was Rs18.9 billion.

Shares of 416 companies were traded. At the end of the day, 78 stocks closed higher, 315 declined and 23 remained unchanged.

WorldCall Telecom was the volume leader with 98.9 million shares, losing Rs0.14 to close at Rs3.81. It was followed by Byco Petroleum with 52.9 million shares, losing Rs0.75 to close at Rs11.40 and Jahangir Siddiqui (R) with 50.4 million shares, losing Rs0.82 to close at Rs2.19.