Market watch: KSE-100 makes smart recovery after slumping over 1,400 points

Benchmark index decreases 251.01 points to close at 38,087.32

KARACHI: The benchmark KSE-100 index staged a smart recovery after plunging over 1,400 points on Thursday and ended the session with a loss of 251 points.

Investors restored to panic selling after the government confirmed late on Wednesday that two people had been infected with the deadly coronavirus. The decline was well in line with market anticipation as economists had earlier predicted serious implications for Pakistan's economy if the virus spread to the country.

Globally, the virus has killed 2,774 people and infected around 78,500 people since December 2019. Covid-19 has sparked fears of a sharp downturn in the global economy and stock markets and global commodities are falling.

In addition to that, Moody's released a report on Pakistan's banking sector where it described the country's continued presence on the Financial Action Task Force (FATF) grey list as 'credit negative' for banks.

Earlier, trading began with a steep decline and the KSE-100 index extended losses during initial hours. However after midday, it started making a surprise recovery.

Buying activity gained pace in late hours and most of the losses were wiped off towards the end of the session.

At close, the benchmark KSE-100 index recorded a decrease of 251.01 points, or 0.65%, to settle at 38,087.32.

Arif Habib Limited, in its report, stated that the market made a strong comeback after losing 1,420 points earlier in the session. "The recovery extended towards the close as the market ended the session down by 251 points," it said.

Concerns relating to coronavirus were on investors' minds that caused selling pressure, which was aggravated by a Moody's report on Pakistan's banking sector.

The banking sector also recorded a recovery, followed by cement firms, which had recently been showing decent progress in terms of sales.

The cement sector led the volumes with trading in 39.4 million shares, followed by vanaspati firms (29.1 million) and oil and gas marketing companies (28.8 million), the report said.

JS Global analyst Mubashir Anis Naviwala said the benchmark KSE-100 index fell 3.7% to touch the low of 36,918 points.

"The confirmation of coronavirus cases in Pakistan certainly played a role," he said. "However, the market recovered on active participation by investors and closed at 38,087, down 251 points."

Major movers of the day which dragged the index down were Pakistan Petroleum (-3.2%), Oil and Gas Development Company (-2.6%), Pakistan Oilfields (-2.8%) and Bank AL Habib (-2%).

On the flipside, Hubco (+0.4%), UBL (+3.6%), Lucky Cement (+1.2%) and Engro (+0.7%) contributed positively to the market.

Volumes on the All Shares Index increased 68% day-on-day. Banking and cement sectors were the centre of investors' attention.

HBL (+1.2%), UBL (+3.6%), Maple Leaf Cement (+4.9%), DG Khan Cement (+3.1%), Lucky Cement (+1.2%) and Pioneer Cement (+4%) were major movers of the two sectors.

"Moving forward, we expect the market to remain volatile in the short term on the back of uncertainty about local and international issues," the analyst added.

Overall, trading volumes jumped to 249.2 million shares compared with Wednesday's tally of 147.9 million. The value of shares traded during the day was Rs10 billion.

Shares of 361 companies were traded. At the end of the day, 103 stocks closed higher, 244 declined and 14 remained unchanged.

Unity Foods was the volume leader with 29.4 million shares, losing Rs0.5 to close at Rs12.95. It was followed by Hascol Petroleum with 17.5 million shares, losing Rs0.81 to close at Rs19.36 and Maple Leaf Cement with 15.1 million shares, gaining Rs1.11 to close at Rs23.73.

Foreign institutional investors were net sellers of Rs808.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.