Bears toss index below 41,000-mark

Benchmark KSE-100 plunges 1,630 points amid political uncertainty

KARACHI:

In line with the trend witnessed in the previous week, tumultuous trading remained the norm at the Pakistan Stock Exchange (PSX) as the index slid deep into red amid weak investor sentiment for the second successive week. The benchmark KSE-100 index dived 1,630.40 points or 3.9% during the week to settle at 40,070.83.

The downward trajectory was seen on back of unfolding developments on the political front. Participants reacted negatively to the political uncertainty caused in the wake of Pakistan Muslim League-Nawaz (PML-N) President and leader of opposition in the National Assembly Shehbaz Sharif being ar- rested by the National Accountability Bureau (NAB) in a money laundering case.

The news set off alarm bells as investors succumbed to selling pressure. Concerns mounted when an Islamabad accountability court indicted former president Asif Ali Zardari in a mega money laundering case, also weighing on the overall sentiments. Moreover, increasing coronavirus cases and news of government imposing micro-smart lockdown in Karachi also kept the market under pressure.

On Monday trading kicked off on a bearish note, pushing the index below the 41,000- mark despite some optimism about Pakistan securing another $300 million in budget support loan from the Asian Development Bank (ADB). Interestingly, the market returned to its winning ways on Tuesday as a rally in shares of oil companies, driven by an increase in global crude prices, propelled the index higher.

Unfortunately, the tables turned as investors resorted to panic selling on Wednesday. The index received a battering ahead of the government’s decision to impose a micro smart lockdown in Karachi to contain the spread of coronavirus. Moreover, a drop in global crude oil prices and unimpressive fi- nancial results in index-heavy sectors also impacted the mood.

However, the bearish trend was short-lived as the index once again bounced back to its winning ways and recouped losses. Cherry picking from investors, who bought stocks at attractive valuations, helped the index close in green.

Despite the preceding session ending in the green, the index failed to maintain the momentum and closed the last trading day of the week in red with participants resorting to profit-booking.

Turbulence in international oil and equities markets took a toll on the local bourse.

In another hitting development, US President Donald Trump confirmed rumours of him testing positive of coronavirus, which turned investors’ sentiment sour. Investors chose to stay on the sidelines as average volumes settled at 391 million shares (down 16% week-on-week) while average traded value clocked-in at $83 million (up2% week-on-week).

In terms of sectors, negative contributions came from fertiliser (190 points), ce- ment (179 points), oil and gas marketing companies (164 points), oil and gas explora-tion companies (159 points), and commercial banks (157 points).

While scrip-wise, negative contributions were led by Hascol Petroleum (61 points), TRG Pakistan (61 points), Systems Limited (60 points), UBL (58 points) and Hubco (57 points).

Foreign selling continued this week clock- ing-in at $8.3 million compared to a net sell of $10.5 million last week. Selling was witnessed in commercial banks ($4.2 million) and ce- ment ($3.2 million). On the domestic front, major buying was reported by insurance com- panies ($15.4 million) and banks/development financial institutions ($12.4 million).

Among major highlights of the week were; World Bank agreed to grant $450 million loan for renewable energy projects in Pakistan, POL sales declined 2% month-on-month in September, FBR surpassed tax collection target for 1QFY21 and the government kept petrol prices unchanged.