KARACHI: The latest round of rupee depreciation on Thursday led the stock market to nosedive over 700 points in intra-day trading.
The fresh devaluation prompted renewed selling as investors reacted with panic to the latest development.
The benchmark KSE-100 Index fell over 650 points below 33,650 points in immediate reaction to the rupee fall, stockbrokers said. The rupee depreciation would badly impact earnings of the companies listed at the PSX.
The move would also narrow down return on investment in stocks or turn it negative going forward, said a stock trader.
At 11:25, the KSE-100 index – a benchmark for market performance – was down 715 points or 2.13% to stand around 33,575.95 points. Selling pressure was witnessed in stocks across the board as investors offloaded stocks.
Arif Habib Limited Head of Equity Sales Saad bin Ahmed said stocks invited renewed selling on return of volatility in currency market.
The fresh rupee depreciation of over five per cent to intra-day low of 148.50 in the inter-bank has made import of raw material so expensive, especially by listed companies in the sectors including pharmaceutical, cement and autos. The volatility in rupee, however, is good for the sectors including oil and exploration and textiles. But at this point in time such sectors also remained under selling pressure, he said.
Action taken by PM Imran Khan on Wednesday to control rupee at a certain level at open market had given confidence to investors that’s why they bought stocks rallied at PSX in the morning.