Karachi stocks ended lower on Wednesday in the absence of any positive triggers and investors were cautious awaiting clarity on the economic loss following the devastation caused by the floods, dealers said.
The Karachi Stock Exchange (KSE) benchmark 100-share index ended 0.86 percent, or 83.36 points, lower at 9,553.81 on turnover of 46 million shares.
“There are no positive triggers in the markets and until there is some clarity on the loss to the economy and how the government will bring the economy back on track, investors are likely to stay on the sidelines,” said Sajid Bhanji, director at brokers Arif Habib Ltd.
Pakistani officials are holding crisis talks in Washington with the IMF, which predicted the catastrophe would have a “major and lasting” economic impact.
This could knock down Pakistan’s economic growth for fiscal 2010/11 to between zero and two percent, Pakistani officials said on Monday, fuelling concern about the country’s stability.
The Asian Development Bank, assessing flood damage and Pakistan’s needs along with the World Bank, said last week economic growth could be three percent.
Authorities are assessing the damage but the finance ministry said it was hard to give an exact number. It said this month the floods meant the country would miss this year’s 4.5 percent gross domestic product (GDP) growth target.
Growth was 4.1 percent in the last fiscal year.
With higher transport costs and food shortages, inflation, and the public anger it could spark, is a major worry.
The KSE-index has lost 8.5 percent since the floods began.
In the currency market, the rupee ended weaker at 85.60/65 to the dollar compared with Tuesday’s close of 85.55/60 to the dollar because of higher dollar demand for import payments.
Dealers said the rupee would be range bound in the short-term but expected pressure in the medium-term.
The rupee fell to a record low of 85.80 on July 12 amid high demand for dollars from importers as well as on debt repayments.
In the money market, overnight rates rose to 12.90 percent compared with Tuesday’s close of between 12.15 percent and 12.50 percent, and dealers said they were waiting for the result of the treasury bill auction, due to be released later in the day.