KARACHI: Pressure mounted on the Pakistan stock market on Monday as the benchmark index dived 1,000 points with investors remaining wary about economic fallout of the coronavirus pandemic.
In a report released on Sunday, the World Bank anticipated Pakistan would fall into recession for the first time in 68 years due to the devastating impact of the virus. The global lender expected the economy to shrink up to 2.2% and suffer a painful decline in per capita income.
The development prompted panic selling at the bourse, which caused a plunge in the KSE-100 index from the moment trading began. Moreover, investor sentiment was further dented by fluctuations in global crude oil prices.
The positive impact of major oil producers agreeing to record output cuts was offset by concerns they would not be sufficient to reduce a glut as the coronavirus pandemic hammered demand.
At close, the benchmark KSE-100 index recorded a decrease of 1,000.22 points, or 3.12%, to settle at 31,032.99.
According to a report of Arif Habib Limited, “The market headed south on the back of negative developments about the OPEC+ deal, which although announced hefty production cuts, but they were not enough to reduce the global oil glut.”
Another key trigger awaited by the oil and gas sector stocks was the announcement of official selling price (OSP) by Saudi Aramco, which was delayed by a week due to earlier disagreement over production cuts among the Organisation of the Petroleum Exporting Countries (OPEC), non-OPEC and G20 countries.
“The OSP announcement came by the end of the session and selling activity on the KSE-100 increased further.”
Earlier, the index bore significant selling pressure in Hubco, which hit its lower circuit with trading in approximately 2.7 million shares and kept the lower circuit by the close. Besides, oil and gas stocks, selling activity was also seen almost across the board in cement and banking sectors.
Sectors contributing to the performance included banks (down 253 points), power companies (148 points), cement firms (110 points), fertiliser producers (107 points) and exploration and production firms (93 points).
Stocks that contributed significantly to the volumes were Hascol, Maple Leaf Cement, Pioneer Cement, Pak Elektron and TRG Pakistan, which accounted for 35% of the total volume.
Stocks that contributed positively to the index included Systems Limited (6 points), Jubilee Life Insurance (6 points), Indus Dyeing and Manufacturing (3 points) and Archroma Pakistan (1 point).
Stocks that contributed negatively were Hubco (126 points), Engro (57 points), UBL (51 points), HBL (49 points) and Nestle (42 points).
Meanwhile, JS Global analyst Danish Ladhani said overall market remained bearish with slightly better volumes but there was limited participation.
“On the economic front, the Planning Commission estimates that the ongoing coronavirus pandemic could force GDP growth to slow down by 0.8 to 1.3 percentage points to 2-2.5% this year,” he said.
“Going forward, we expect the market to remain negative and recommend investors to sell on strength,” he added.
Overall, trading volumes increased to 153.9 million shares compared with Friday’s tally of 127.1 million. The value of shares traded during the day was Rs5.7 billion.
Shares of 338 companies were traded. At the end of the day, 47 stocks closed higher, 270 declined and 21 remained unchanged.
Hascol Petroleum was the volume leader with 17 million shares, losing Rs0.30 to close at Rs14.85. It was followed by Maple Leaf Cement with 12.7 million shares, losing Rs1.64 to close at Rs22.31 and Pioneer Cement with 8.4 million shares, losing Rs1.99 to close at Rs35.57.
Foreign institutional investors were net sellers of Rs215.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.