Market watch: New Covid-19 measures trigger near 1,300-point drop

Benchmark index falls 1,298.86 points to settle at 39,888

KARACHI:

The Pakistan Stock Exchange (PSX) witnessed a bloodbath on Thursday as the new measures to curb the spread of Covid-19 in Pakistan came into force.

Following the restrictions, the KSE-100 index dived close to 2,000 points in intra-day trading as market participants pulled out investments over fears of further slowdown in business activities.

The KSE-100 index kicked off trading with a dip and continued to spiral downward throughout the day. Although late session buying helped the benchmark index recoup few of the losses, the index finished deep in red.

At close, the benchmark KSE-100 index recorded a decrease of 1,298.86 points, or 3.15%, to settle at 39,888 points.

A dip in global equity markets, following a second lockdown imposed by major economies of Europe also continued to haunt the local stock market and dampen investor sentiments.

On the international front, world stock markets struggled to regain ground after losing nearly $2 trillion on Wednesday. Meanwhile, oil also remained under pressure as the commodity closed Wednesday with a loss of 5%.

The looming US elections, due on November 3, also added to investor woes as the uncertainty impacted trading at the bourse.

Speaking to The Express Tribune, MAFA Capital CEO Adnan Agar said, “Covid-19 cases have registered a substantial rise in Pakistan over the last few days, which led the government to announce a new set of measures late on Wednesday."

“The measures, which came in effect on Thursday, have sparked a new wave of panic among investors who anticipate additional measures if the situation turns worse,” he said.

The official recalled that some European economies had imposed a second lockdown this week, which prompted a sell-off in international equity markets.

Rising coronavirus cases across the world have shaken investor sentiments causing turmoil in all equity markets and the spillover impact is being felt at the domestic market, he said

“Though Pakistan will not be directly affected by the US election's outcome, all economies would be affected indirectly, hence investors are weighing sentiments on the election result,” he said.

He added that since the market had been rallying for a long time, a correction was due and it has finally shown up.

According to him, uncertainty will continue at the PSX till November 3 after which, clarity over the US presidential elections will help stabilise it.

A report from Arif Habib Limited stated that increasing incidence of coronavirus cases, partial lockdown in Pakistan, lockdowns in European countries, end of roll-over week, end of result season, global sell-off in stocks as well as commodities markets were enough for the market to lose 1,911 points during the session.

KSE-30 touched 5% prior to the maximum time limit of 2:30 and reversed in time to avoid market halt.

Selling pressure was evident across the board with heavy selling in exploration and production and banking sector stocks, which saw respective price levels near and at lower circuits, the report said.

Overall, trading volumes soared to 541.8 million shares compared with Wednesday’s tally of 368.4 million. The value of shares traded during the day was Rs20.3 billion.

Shares of 422 companies were traded. At the end of the day, 47 stocks closed higher, 368 declined and seven remained unchanged.

Unity Foods was the volume leader with 60.5 million shares, losing Rs0.27 to close at Rs22.9. It was followed by Maple Leaf Cement with 39.1 million shares, losing Rs0.36 to close at Rs42.27 and Pakistan International Bulk Terminal with 38.6 million shares, losing Rs0.78 to close at Rs12.48.

Foreign institutional investors were net sellers of Rs880.45 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.