PSX drops 650 points amid lack of support fund

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OUR CORRESPONDENT
ISLAMABAD/ LAHORE/ KARACHI
The Pakistan stock market dropped over 650 points in intra-day trade on Monday, due to the absence of the market support fund. Later, the bourse made a slight recovery but still closed deep in the red. The Economic Coordination Committee (ECC) of the Cabinet approved the market support fund worth Rs20 billion on May 31, 2019. However, it has remained inactive since the Ministry of Finance has yet not issued the required letter of comfort to establish the fund. The state-owned National Investment Trust (NIT) is assigned to use the fund to buy shares of the state-owned enterprises listed at the Pakistan Stock Exchange (PSX). The benchmark KSE100 index was down 2%, or 691 points, to 34,434.39 points at 2PM. Secondly, this is the first day of the current rollover week at the PSX, during which investors settle debt taken to buy stocks. Besides, contraction in cement sales and businessmen’s protest over the weekend against the submission of a copy of computerized national identity card (CNIC), to get domestic trade documented, also invited selling pressure at the stock market. It witnessed across the board selling. Each and every sector, including oil and gas exploration, cement, cars and banks, are facing selloffs. The market may drop another 500 to 1,000 points if the market support fund remains absent, going forward. The bourse kicked off trading on a positive note, hitting a high of +69 points, but soon came under pressure, touching a low of -757 points. The cement sector came under pressure where Lucky Cement (-5%), Fauji Cement (-6.1%), DG Khan Cement (-5%), Maple Leaf Cement (-5%), Kohat Cement (-5%) and Cherat Cement (-5%) closed at their lower circuits as reports came about further price cuts in the northern region.

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