Market watch: PSX crashes as index records largest drop in history

KSE-100 dives 2,376 points amid plunge in global markets, growing pandemic fears

KARACHI: The Pakistan Stock Exchange (PSX) took a heavy battering as the benchmark index recorded the largest single-day drop in history of over 2,300 points, plunging to a four-month low.

The KSE-100 index started tumbling from the moment trading began as panic gripped investors over implications of the fast spreading coronavirus pandemic. With the number of infected people mounting in Pakistan and across the world, the investors became jittery and adopted a "dump-and-run" approach to exit the risky assets.

The massive selling pressure once again triggered a halt to trading activity for 45 minutes at the PSX - the fourth in two weeks. The trading stopped automatically after the PSX's second benchmark KSE-30 Index fell 5% and failed to recoup losses within a five-minute window.

The previous three halts had come into play at 4% as per the previous laws.

At close, the benchmark KSE-100 index recorded a decrease of 2,375.97 points, or 6.59%, to settle at 33,684.91.

"The market closed lower by 6.6%, which is the highest decline in percentage terms since May 20, 2002," said an AHL report.

“The market dropped due to lower regional markets, lower commodity prices and unforeseen circumstances and threats to Pakistan’s economy from corona virus,” said AHL Head of Research Samiullah Tariq.

He added that it should perform better on Tuesday.

Oil stocks, in particular, received a beating with most of them touching their lower limits as international crude prices dived despite emergency rate cuts by the US Federal Reserve and other central banks, which failed to tame markets.

China's factory output plunged at the sharpest pace in 30 years amid the spread of coronavirus that further dented sentiment.

"Pakistan's stock market is also facing a bear run. It is down 20% in two months," said Topline Securities CEO Mohammad Sohail in a terse comment.

World equity markets and the dollar were roiled after the Federal Reserve slashed interest rates to a range of 0-0.25% and its major peers offered cheap US dollars to ease a ruinous logjam in the global lending markets.

The drastic manoeuvres were aimed at cushioning the economic impact as the breakneck spread of the coronavirus all but shut down more countries, though the measures had only limited success in calming panicky investors.

According to an Aba Ali Habib Securities' report, spillover effects of global developments and uncertainty over the upcoming monetary policy (due on Tuesday) drove investors' sentiment.

JS Global analyst Maaz Mulla said, "The stock market opened with a free fall and the index plummeted over 2,442 points in intra-day trading, following sinking equity markets across the world amid deepening corona fears."

He added that they expected the monetary policy committee, scheduled to announce the policy rate on Tuesday, to make a reduction of 50 basis points.

HBL (-7.5%), Engro (-6.9%), Hubco (-7.1%), MCB Bank (-7.5%), UBL (-7.5%), Fauji Fertiliser Company (-6.8%), Oil and Gas Development Company (-7.5%), Lucky Cement (-7.5%) and Pakistan Petroleum (-7.5%) cumulatively dragged the index down by 1,095 points.

Traded value stood at $51 million, down 42% and volumes came in at 215 million shares, down 26%.

"Going forward, we expect the market to remain bearish in the short term. We recommend remaining cautious on the back of global coronavirus situation," he added.

Overall, trading volumes decreased to 215.4 million shares compared with Friday's tally of 290.5 million. The value of shares traded during the day was Rs8.06 billion.

Shares of 346 companies were traded. At the end of the day, 18 stocks closed higher, 319 declined and nine remained unchanged.

The Bank of Punjab was the volume leader with 44.4 million shares, losing Re1 to close at Rs9.10. It was followed by Maple Leaf Cement with 13.5 million shares, losing Rs2.06 to close at Rs25.52 and Unity Foods with 9.3 million shares, losing Re1 to close at Rs11.34.

Foreign institutional investors were net sellers of Rs143.6 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.