According to a research house report, Pakistan equities witnessed a Bloodbath Monday with benchmark KSE100 Index closing deep in red, below 42,500 level; down 2.5% or ~1100 points and recording the biggest daily decline since December 7, 2017. Market caved in to selling pressure as political noise in the country rose given Civil-Military tensions over ousted PM’s remarks involving Mumbai attacks. This along with persistent Foreign selling (net outflow of ~USD8 MTD), uncertainty over macro economics and lack of near-term positive triggers led to the broader market meltdown. Steels, Cements and E&Ps were the worst three sectors of the entire market in terms of performance on KSE100 Index.

Moreover, on KSE100 Index, just Five stocks closed positive, Ten remained unchanged while 85 names closed in red. Out of those 85 names, 36 names closed at their respective lower price limits or fell by more than 4%. Meanwhile, turnover on benchmark Index increased by 27% versus this month’s average.

MSCI is scheduled to announce the result of its Semi-Annual Index Review early morning hours tomorrow. In case the Index Provider assigns a higher than expected weight to China-A Shares, the resultant pro-rata reduction in Pakistan’s weight can dampen the sentiments further. Barring any such negative surprises from MSCI, we recommend cherry picking to take advantage of the ongoing weakness in value plays.