KARACHI: Karachi Stock Exchange (KSE) fell sharply in thin trade on Monday as local investors remained on the sidelines while foreigners continued to sell. Dealers said the market was expected to stay soft for the near term.
KSE benchmark 100-share index ended 1.99 percent, or 231.47 points, lower at 11,375.14, after falling more than two percent on Friday.
Turnover fell to 58.53 million shares, compared with 125.13 million shares traded on Friday.
"There was a lot of foreign selling today as well, and as a result the local players were also under pressure and remained shy," said Mohammed Sohail, chief executive of brokers Topline Securities.
On Friday, foreign investors sold shares worth a net $8.83 million.
Analysts say in a small market like Pakistan, foreign selling of even $2 million to $3 million in a day amid lack of buyers is enough to spark a sell off. The numbers for Monday will be released later in the day.
"Pakistan is one of the few markets that saw a sell-off today, and as there is no apparent reason for this, it looks like one foreign fund wants to exit the market," said Sohail.
Dealers said state-run National Bank of Pakistan saw the most selling pressure, and ended down 4.1 percent at 73.66 rupees.
In the currency market, the rupee eased versus the dollar as banks bought the US currency on behalf of their clients to clear import payments.
"There was healthy dollar demand today and banks were buying the currency for their importer clients, putting pressure on the rupee," said a local bank dealer.
The rupee closed at 85.50/55 to the dollar, down from 85.45/48 on Saturday.
Dealers said the rupee was expected to remain range-bound in coming days, and added that a steady inflow of dollars, especially in the form of remittances, is likely to help the rupee avoid a sharp fall despite steadily rising dollar demand. In the money market, overnight rates stayed unchanged at the top level of 13.90 percent in tight liquidity, and dealers said the market was now eyeing Tuesday's treasury bills auction. The State Bank of Pakistan has set a target of 150 billion rupees ($1.75 billion) for the auction, which will be settled on Thursday, when inflows of 145 billion rupees are due.
Banks in Pakistan will be closed on Wednesday for a public holiday.
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