Closing Bell: Buy when there is blood on street

May 8, 2019 (MLN): Baron Rothschild, a British banker and politician from the wealthy international Rothschild family is credited with saying that “The best time to buy is when there is blood on the streets”. In other words, when everyone is selling, it's a great time to buy!

When there is blood on the streets, there is a panic selling and a majority of people tend to sell their stocks. In such scenarios, the demand of the stocks decreases a lot compared to the supply and when demand is less, the investor can purchase stocks at a better discount.

The local equity market nosedived to a 3-year low today, as political and economic uncertainty drove investor sentiments, leading to panic selling, which caused KSE-100 index to hit a new intra-day low of 34,850 points.

Some players thought the index would surely slip further towards at least 34,000 points, but that was not to be! The market bounced back right after, and close at 35, 035 points, after shedding 595 points. This is the lowest level the index has been since May 4, 2016.

The existing investors are afraid to invest further because they are already bathing in their blood. As many of the stocks in their portfolio may be in red, these investors might be scared to make further investments. Furthermore, uncertain policy environment is leading to higher volatility and lower liquidity in the market.

Fertilizer Sector emerged as the top loser during the session, as it snatched around 128 points from the index. Oil & Gas Exploration Companies and Commercial Banks took the second and third lead as they lost approximately 104 and 55 points respectively by the day end. Furthermore, the scrips that significantly influenced the benchmark index’s performance included MCB (-3.09%), ENGRO (-1.93%), FFC (-2.29%), PPL (-1.72%) and MARI (-5%).

On the whole, 86.7 million shares of these 94 companies were traded today, at PKR 4.2billion. Moreover, the share prices of 11 companies reported an increase, 81 companies reported a decline whereas 2 company reported no change.

Meanwhile, the broader KSE All Share index lost 416 points in today’s trade and closed the session at 25,864 points which is 1.58% lower than yesterday’s closing value at the index.

A total of 113 million shares were traded within this index at PKR 4.5 billion.

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