Market watch: KSE-100 nosedives as oil prices crash

Benchmark index falls 1,076.82 points to settle at 32,422.83

KARACHI: Bears returned to the stock market on Tuesday and investors offloaded index-heavy oil shares following a crash in the price of West Texas Intermediate (WTI) crude in the world market late on Monday, which triggered a plunge of 1,077 points in the KSE-100 index.

Investor sentiment was dented as US crude oil futures collapsed below $0 for the first time in history amid a coronavirus-induced supply glut, ending the day at a stunning minus $37.63 a barrel as desperate traders paid to get rid of oil.

Aiding the fall were comments from IMF Resident Representative Teresa Daban Sanchez that Islamabad had not requested the G20 countries for debt relief.

In addition to that, a higher-than-expected inflation was projected for April that turned the mood more pessimistic at the bourse.

Earlier, trading began with a dip, however, some of the losses were wiped off till midday. Nevertheless, weak investor sentiment restricted the index from entering positive territory. The decline deepened towards the end of the session.

At close, the benchmark KSE-100 index recorded a decrease of 1,076.82 points, or 3.21%, to settle at 32,422.83.

Arif Habib Limited, in its report, stated that the market opened down by 478 points and continued to slide throughout the session, which extended to -1,199 points. The benchmark index closed down 1,078 points.

“Concern raised by the IMF over the G20 debt relief announced last week by the government as well as forecast of higher-than-expected inflation with caution over policy rate cut caused panic in the market,” it said.

In addition, the onslaught on the WTI and Brent crude prices in the international market kept bears active in oil and gas stocks. Oil and Gas Development Company (OGDC), Pakistan Petroleum, Pakistan Oilfields, PSO and Hascol Petroleum touched their lower circuit breakers.

Banking-sector stocks also adjusted downwards. The cement sector saw initial selling pressure, but rallied following the hint that cement prices would be increased in coming days.

Nonetheless, overall negative sentiment could not save cement stocks from the selling pressure.

The cement sector recorded trading volume of 151.3 million shares, followed by oil and gas marketing companies (28.6 million) and technology firms (21.4 million), the report said.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index nosedived nearly 1,200 points (3.6%) during the day before finally closing at 32,422, down 3.2%.

International crude oil prices continued to decline and as a result OGDC (-7.1%), Pakistan Petroleum (-7.4%) and Pakistan Oilfields (-7%) from the exploration and production sector closed near their respective lower circuits.

Healthy activity was seen in the cement sector where Pioneer Cement (+7.5%) hit the upper circuit with major volumes in Maple Leaf Cement, Fauji Cement, DG Khan Cement, Pioneer Cement and Cherat Cement.

Major movers of the index were Engro (-5.8%), HBL (-2.7%), Fauji Fertiliser (-3.7%), Hubco (-6.7%), Lucky Cement (-2.6%), OGDC (-7.1%) and Pakistan Petroleum (-7.4%).

Traded value stood at $94 million, down 11% and volumes came in at 339 million shares, down 15%.

Apart from cement stocks, major contribution to the total market volume came from Hascol Petroleum (-7.5%).

“Going forward, we expect the market to remain negative and recommend investors to sell on strength,” the analyst added.

Overall, trading volumes decreased to 339.2 million shares compared with Monday’s tally of 400 million. The value of shares traded during the day was Rs15.4 billion.

Shares of 339 companies were traded. At the end of the day, 70 stocks closed higher, 258 declined and 11 remained unchanged.

Maple Leaf Cement was the volume leader with 59.6 million shares, losing Rs0.26 to close at Rs26.79. It was followed by Fauji Cement with 24.2 million shares, losing Rs0.72 to close at Rs16.63 and Hascol Petroleum with 22.1 million shares, losing Rs1.12 to close at Rs13.85.

Foreign institutional investors were net sellers of Rs402.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.