As the KSE-100 index has shed 1010 points, touching 39,256 points, the local stock exchange has witnessed its lowest level in the current year.
Investors have been stirred after the July 6th verdict of National Accountability Court to imprison the former Prime Minister Nawaz Sharif for 10 years with a fine of 8million pounds. While his daughter, Maryam Nawaz has been sentenced to eight years imprisonment along with a fine of 2million pounds, his son-in-law, Captain Safdar has been sentenced to one-year imprisonment.
Beginning with 40,284 points at the start of the trading day, the market dropped down in the first half of the session. Over 30 million shares were sold by noon and by 1 pm the index had fallen by 137 points, reaching the lower ebb of 39,142 points.
According to the Vice President of the Research Department at Shajar Capital, Yawar-uz-Zaman an environment of risk-averse trade is being created due to the consistent political instability.
Zaman said, “Political uncertainty and foreign selling, which has persisted in the market for a while now, have driven down the confidence of local participants.”
He also stated that the investors were waiting for a further drop in the market before they could resume buying.
The cement sector was significantly hit during the first half of the intra-day trading. The investors had initially been unwilling to move from their selling positions because of the cut in the program by the caretaker government.
Zaman further predicted that the overall sentiment was to remain depressed until the new government came to power.
Director of the Research Department at Arif Habib Corporation, Samiullah Tariq also identified the political instability and uncertainty as the major factor in the defeatist trend in the stock market.
The stock market has also been affected by the money laundering inquiry that has also placed the CEO’s of a few banks were placed on the Exit Control List.
Hussain Lawai, the president of a local bank was arrested by Federal Investigation Agency in connection with alleged money laundering as the Agency is investigating a money laundering scandal of about 35 billion rupees.
According to Tariq, the sector’s earnings have had a past trend of taking a hit with the country’s macro outlook. “Cement along with the auto sector has underperformed in the last year, and the trend is likely to continue till the polls are held,” stated Tariq.