KARACHI: The mood swings of investors at the Pakistan Stock Exchange (PSX) on Wednesday triggered what turned out to be the highest-ever intraday volatility since the inception of the benchmark KSE 100-share index back in the early nineties.
With the announcement of the Panamagate case verdict due today, nervous investors started to ditch the stocks in panic selling soon after the market opened. This pulled the index down to the bottom of the pitch at 46,048, or an intraday low of 826 points.
However, institutional buying took hold by mid-day which helped the index bounce back. The index then continued to surge as bewildered investors shaded their eyes with their hands to see the benchmark hit an intraday high of 47,716 points before closing at 47,603 points with a gain of 1.56 per cent.
All of that created something that was never seen before, an enormous swing of 1,668 points between the intra-day high and low.
In terms of percentage, however, the volatility stood at 3.56pc, which pales in comparison with the highest ever intra-day change of 8.6pc (due to low-base effect) during the stock crisis in June 2008.
Major sellers on Wednesday were foreign funds, which disposed of equity worth $13.6 million, and individuals who decided to take profit by selling off shares valued at $18.1m.
Local institutional participants, banks, companies and mutual funds helped to absorb much of the selling by accumulating value stocks.
Senior market participants said that the movement in stock prices followed the market murmurs over the possible outcome of the verdict for or against the prime minister.
Nasim Beg, vice-chairman at MCB-Arif Habib Savings and Investment Ltd, said markets do often show volatility as speculators and weakholders are likely to lose their nerves while those who invest based on company fundamentals retain their sangfroid.
Stock strategists at Intermarket Securities commented that with the refurbished margin financing product on the way and Panama Papers’ case reaching its conclusion, it could be surmised that the days of uncertainty for the KSE-100 Index were now over. “Perhaps, as anticipated, sanity prevailed in the end.”
The traded volume skyrocketed by 62pc to 265m shares on Wednesday. K-Electric, TRG Pakistan and Engro Polymer and Chemicals Ltd saw 59m shares change hands out of the total volume. Traded value surged to Rs15.3 billion from Rs9.4bn a day earlier.
Leading contributors to the index were Oil and Gas Development Company which rose by 3.4pc, Engro Corporation 3.3pc, Pakistan Petroleum 3.1pc, Dawood Hercules 3.7pc and Fauji Cement 5pc, adding 227 points to the index in aggregate, said Topline Securities analyst Adnan Sami Sheikh. In contrast, International Steels Ltd dropped 4.3pc, MCB Bank 0.7pc, Pakistan International Bulk Terminal 1pc, Abbot Laboratories 0.9pc and Hum Network Ltd 1.3pc; these shares collectively shaved 40 points off the index.