Market watch: KSE-100 bleeds as global markets plunge

Benchmark index decreases 1,162.44 points to close at 38,219.67

KARACHI: After a day's respite, bears staged a comeback at the bourse, pulling the KSE-100 index down by over 1,100 points as market participants took cue from the tumbling global markets and pulled out their investments to buy safe assets.

World stock markets dived on Friday as disruptions to business from the spreading coronavirus epidemic worsened, stoking fears of a prolonged economic slowdown. The MSCI's broadest index of Asia-Pacific shares outside Japan fell 2.1% during the day.

In addition to this, the global crude oil prices plunged 5% during the day over reports that Russia would not agree to steeper oil output cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies to prop up prices.

The revelation triggered selling of oil and gas sector stocks in Pakistan's market.

Despite the pessimism, the cement sector outperformed the market with cement companies topping the volume chart.

Trading in the first session began with a dip and weak investor sentiment, coupled with the global sell-off, resulted in the index losing nearly 650 points.

The second session kicked off positively as investor cherry-picked stocks, however, the optimism evaporated shortly and selling pressure emerged once again. In final hours, the market extended its fall and inched closer to the 38,200-point mark towards the close.

At close, the benchmark KSE-100 index recorded a decrease of 1,162.44 points, or 2.95%, to settle at 38,219.67.

Arif Habib Limited Head of Research Samiullah Tariq told The Express Tribune that the dip in the KSE-100 index was a result of the plunge in international stock markets. "In addition to that, the price of oil fell globally and hence index-heavy stocks related to oil reported losses," he said.

The analyst pointed out that international crude oil prices massively impacted the direction of the KSE-100 index.

Moreover, the global economy was heading towards a recession and investors were pulling out their investments from stocks and ploughing money into safer assets such as gold.

Hence, the flight to safety triggered the massive sell-off during the day, the analyst concluded.

A report of Arif Habib Limited stated that the market saw a major drawdown of 1,259 points during the session, which ended down by 1,162 points.

"The cement sector continued its rally but ended abruptly by the end of session, sustaining price losses from last day's close," it said. "Other than that, weak oil prices reflected in the oil and gas chain, primarily due to a decline in US crude West Texas Intermediate (WTI), which hit the lowest level in recent times."

Resultantly, Oil and Gas Development Company and Pakistan Petroleum were seen closing near their lower circuits.

The fertiliser sector also booked losses on the back of urea price reduction by Fauji Fertiliser.

The cement sector led the trading volumes with 115.5 million shares, followed by banks (15.5 million) and technology firms (13.8 million), the report added.

Overall, trading volumes decreased to 244.5 million shares compared with Thursday's tally of 340.7 million. The value of shares traded during the day was Rs11.3 billion.

Shares of 355 companies were traded. At the end of the day, 67 stocks closed higher, 265 declined and 23 remained unchanged.

Maple Leaf Cement was the volume leader with 27.3 million shares, losing Rs0.18 to close at Rs28.02. It was followed by Fauji Cement with 25.9 million shares, losing Rs0.4 to close at Rs17.48 and Pioneer Cement with 22.3 million shares, losing Rs0.41 to close at Rs36.18.

Foreign institutional investors were net sellers of Rs352.3 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.