Market watch: KSE-100 sheds 325 points on lower growth forecast

Benchmark index falls 0.95% to settle at 33,709.63

KARACHI: The bear-run continued at the Pakistan Stock Exchange on Thursday and the KSE-100 index extended losses by 325 points as the downgrade of Pakistan’s growth projection by the International Monetary Fund (IMF) weighed on investors’ mind.

On Wednesday, the IMF revised down its growth prediction for Pakistan for fiscal year 2020-21 to 1% from the previous estimate of 2%, which dampened interest at the bourse.

Trading at the stock market also reflected the sell-off in international equity markets and the decline in global crude oil prices. Exploration and production and oil marketing companies bore the brunt of impact of the international oil price fall and both index-heavy sectors closed entirely in the red.

Soaring domestic coronavirus cases coupled with projections that the second wave of infections would inflict more damage to Pakistan’s economic indicators forced investors to offload stocks and book profits.

Earlier, trading began with a steep dip and weak investor sentiment restrained the market from posting any gains. Selling by market participants gained pace as the session progressed. A buying spree towards the end of the session failed to wipe out the losses.

At close, the benchmark KSE-100 index recorded a decrease of 325.02 points, or 0.95%, to settle at 33,709.63 points.

JS Global analyst Danish Ladhani said the KSE-100 index hit a low of -377 points and closed at 33,709, down 325 points. Fertiliser, banking and exploration and production sectors were the major laggards.

“The market remained under pressure with the IMF lowering Pakistan’s growth forecast by 0.5-1% for FY21 as the global economy appears to have suffered a greater setback following the Covid-19 pandemic,” he said.

Pakistan Petroleum (-2.1%), Oil and Gas Development Company (-2.1%) and Pakistan Oilfields (-0.6%) in the exploration and production sector remained in the negative zone as oil prices fell in the international market on the back of swelling US crude stockpiles and a surge in coronavirus cases.

Furthermore, Engro (-0.5%), Fauji Fertiliser Company (-1.5%), HBL (-0.8%), Oil and Gas Development Company (-2.1%), Hubco (-2.4%), MCB (-2.1%), Pakistan Petroleum (-2.1%) and Lucky Cement (-0.8%) were the index movers.

“Going forward, we expect the market to remain range bound and recommend investors to sell on strength,” the analyst said.

Arif Habib Limited, in its report, stated that the domestic market followed the downtrend witnessed in global stock markets and especially took negative cue from international crude prices that shed $3 per barrel overnight.

“Exploration and production, oil and gas marketing and refinery sectors sustained price losses,” it said. “Cement sector showed some good performance on the back of anticipated increase in sales in the ongoing month.”

Selling activity was seen across the board. Post-session, the State Bank announced further rate cut of 100 basis points to 7%, which explained the more-than-usual negativity in banking stocks, particularly HBL, MCB and Bank Alfalah.

As had been the practice in the past few sessions, institutional investors seemed more interested in a moderate close to FY20 and, therefore, executed trades of mark-to-market nature, it said.

Overall, trading volumes dipped to 168.4 million shares compared with Wednesday’s tally of 195.7 million. The value of shares traded during the day was Rs5.2 billion.

Shares of 355 companies were traded. At the end of the day, 100 stocks closed higher, 229 declined and 26 remained unchanged.

WorldCall Telecom was the volume leader with 19.6 million shares, gaining Rs0.07 to close at Rs0.87. It was followed by Hum Network with 13.4 million shares, gaining Rs1.08 to close at Rs15.77 and TRG Pakistan with 12.5 million shares, losing Rs0.07 to close at Rs27.58.

Foreign institutional investors were net sellers of Rs360.6 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.