KARACHI: The stock market on Monday plummeted by over 1200 points due to the high inflation reading and the impact of the coronavius in China.
The KSE 100 index came crashing down as investors offloaded stocks as the rising prices of commodities eroded profits. The bourse declined 1221.55 points, or a decrease of 3.02 percent to 40,409.38 points. The indices remained in the red for most of the day as the market shed over 1300 points in intra-day trading.
The lower KSE 30 index also decline by 632.35 points (-3.30 percent) while the total volume of scripts declined by 93.158 million. The stock prices of the top active stock also declined for most sectors notably the banking, equities, insurance, cement, and oil exploration. There was total carnage and subdued mood as investors remained cautious throughout the day.
The decline is being attributed to the high inflation rates this month. The headline Consumer Price Index (CPI) jumped 14.6 percent in January as compared to the same period in the previous year. This has reduced hopes that that the monetary policy will be eased in March. The State Bank has earlier maintained the key interest rate at 13.25 percent due to the high interest rate.
The stock market was anticipating a change in the monetary policy, but was disappointed by the central bank’s announcement. The high inflation rate has reduces any change that the key policy rate may be reduced next month.
Another reason for the plunge is the coronavirus outbreak in China which has become a global epidemic and had a toll on the stock market. The Chinese stock market crashed on Monday as it reopened after a week due to the Lunar New Year holidays. The stocks closed to nine percent within hours of opening pointing to a slowdown in the global economy.
The scale of the plunge was remarkable even by the standards of China’s notoriously volatile share markets, indicating deep concern over the viral outbreak’s economic impact. The global concern has dragged down stocks and major corporate names have frozen or scaled back Chinese operations, threatening the global supply chain as so many of the world’s products are manufactured in China.
Get the MMnews App now & scroll through your favourite content faster!