Market watch: Stocks dive 520 points on global sell-off

Benchmark index decreases 1.34% to close at 38,338.33

KARACHI: Selling of shares continued at the stock market on Wednesday as the benchmark KSE-100 index dived nearly 800 points in intraday trading before recovering partially.

The turmoil in global equity markets persisted following a sharp increase in the number of novel coronavirus cases in Middle Eastern countries and Pakistan's stock market was also impacted as investors reacted with concern over the ongoing developments and offloaded their stockholdings.

In addition to that, declining crude oil prices in the international market triggered a sell-off in stocks of the exploration and production and oil and gas marketing companies in Pakistan. Subsequently, both the sectors closed entirely in the red.

Earlier, trading kicked off with a short-lived spike, which disappeared shortly afterwards and from that point onwards, the KSE-100 index continued to fall for the rest of the day.

A few jumps were witnessed, however, weak investor sentiment coupled with multiple negative triggers restricted the market from making gains. However, late-session buying lifted the index upwards, helping wipe off some of the losses.

Arif Habib Limited Head of Research Samiullah Tariq told The Express Tribune that the combined impact of the virus, weak regional markets, lower oil prices and uncertainty over the next International Monetary Fund (IMF) loan tranche fuelled bearish sentiment at the Pakistan Stock Exchange.

He was of the view that an expected decline in inflation rate for February could help improve market sentiment.

At close, the benchmark KSE-100 index recorded a decrease of 520.12 points, or 1.34%, to settle at 38,338.33.

JS Global analyst Danish Ladhani said equities closed on a negative note with the benchmark KSE-100 index nosediving 520 points and closing at 38,338, down 1.3%.

"The market belly flopped once again as more new virus infections and deaths were reported around the world, with South Korea the worst-affected country outside of China," he said. "Furthermore, high anxiety prevailed in Europe as the disease spread from Italy."

In the cement sector, Maple Leaf Cement reported a consolidated loss of Rs2.42 per share in 1HFY20 vs earnings per share of Rs1.94 in the same period of last year with no cash payout.

Hubco (-3.2%), Engro (-2.6%), Dawood Hercules (-4.9%), PSO (-3.2%), UBL (-2.2%), Pakistan Petroleum (-1.1%), Lucky Cement (-1.5%), Oil and Gas Development Company (-0.8%) and Fauji fertiliser (-0.7%) cumulatively contributed -294 points towards the negative close of the index.

Traded value stood at $45 million, up 17% and volumes came in at 148 million shares, up 19%.

"Going forward, we expect the market to remain bearish in the short term on the back of uncertainty at the international level," the analyst said.

A report of Aba Ali Habib Securities stated that the KSE-100 index plunged 520.12 points on cues from the global market sell-off.

"Stocks registered a sell-off as the surge in new coronavirus cases in the Middle East, Europe and Asia made investors run for safety," it said. "Another reason for the slide in the bourse is the ongoing roll-over week."

Investor sentiment remained muted throughout the session as companies posted unimpressive results.

During the session, the index found support and resistance at 38,074.16 points and 38,976.83 points respectively, the report added.

Overall, trading volumes jumped to 147.9 million shares compared with Tuesday's tally of 124.3 million. The value of shares traded during the day was Rs6.9 billion.

Shares of 348 companies were traded. At the end of the day, 80 stocks closed higher, 251 declined and 17 remained unchanged.

Unity Foods was the volume leader with 29.8 million shares, losing Rs0.1 to close at Rs13.45. It was followed by Hascol Petroleum with 10.4 million shares, losing Rs0.9 to close at Rs20.17 and TRG Pakistan with 7.5 million shares, losing Rs0.96 to close at Rs22.18.

Foreign institutional investors were net sellers of Rs391.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.