LAHORE - After closing last week on a positive note albeit flat WoW, KSE-100 index started off the week in negative territory as the market slipped below 40K level. The index fell 605 points during the day, ending the trading session at 39,666 level. In percentage terms, the market has declined by 1.5percent over Friday.

Cement sector continued with the slide, deleting 118 points from the index. Simultaneously, after rallying in anticipation of interest rate hike towards the end of last week, Commercial Banks lost steam, wherein the sector reduced the index by 106 points. Market sentiment remains dull as political noise and economic woes continue to weigh in on the market participants.

Trading activity improved, with volumes up 18percent to 148million and value traded up 6percent to $50million.

Experts said that havoc condition was witnessed at the PSX, where market opened on a positive note making an intraday high of +194 points, but later succumbed to selling pressure as the index made an intraday low of -875 points to close at 39,666 level.

Major correction appeared in the market due to continuous foreign net outflows over the past week. Pakistani rupee dropped sharply against the US dollar in the early trading hours in what appeared to be another devaluation by the central bank.

The currency was trading at around Rs125/126 per dollar in morning after closing at Rs121.5 per dollar on Friday.

Cement sector lead the decline where major heavyweights closed near their respective lower circuits. DGKC (-4.89percent), FCCL (-4.85percent), PIOC (-4.95percent) and CHCC (-4.70percent) were among the major losers. Banking space closed lower than its previous day close, despite the State Bank of Pakistan's raise its interest rate by a sharp 100 basis points to 7.5 per cent during the weekend. HBL (-2.32percent), MCB (-1.74percent), NBP (-2.23percent) and BAHL (-2.42percent) were the major loser of the mentioned sector. PSO (-4.59percent) from the OMC sector closed in the red zone on the back of the news that the Supreme Court ordered a complete audit of the Pakistan State Oil to verify the pricing structure for the last three years and determine fairness of price charged to the consumer. Moving forward it is excepted market to witness similar trend of volatility in the coming sessions due to overall ambiguities in the political environment.

As per a notice, Byco's wholly owned subsidiary, i.e., Byco Isomerisation Pakistan (Private) Limited has commissioned country's largest isomerisation plant. Currently, Byco produces and supplies 40,000 tons per month of Gasoline which will steadily increase in coming days to 65,000 tons per month.

Experts said that Ministry of Finance has tailored another plan to increase Regulatory Duty (RD) on more than one thousand imported items, estimating an additional collection of $1.12bn which will help reduce trade deficit. Moreover, the Federal Board of Revenue (FBR) has withdrawn sales tax zero-rating facility on the import of raw and ginned cotton and subsequently imposed 5 percent sales tax on this item at import stage. In order to discourage imports, the State Bank of Pakistan over the weekend announced withdrawal of facility of 100 percent advance payment against Letter of Credit (L/C) without guarantee from the supplier abroad for the import of all eligible items.

The FBR allowed sales tax adjustment paid at customs clearance stage by steel melters on import of raw materials including various categories of re-meltable iron and steel scrap.

Experts said that overwhelmed at the debt level and depleting foreign exchange reserves, Pakistan's caretaker government has kick-started the process of seeking a bailout from the International Monetary Fund (IMF) to enable the incoming government to move along quicker if it chooses to exercise the option.