PSX down as lockdown fears heighten
Bears marred the trading session at the Pakistan stock market during the outgoing week as the resurgence in Covid cases outgrew the optimism over the development of a vaccine, which has yielded encouraging results.
In addition to worries over the pandemic, developments on the political and economic front also hampered progress as the KSE-100 index ended the week 167 points down to close at 40,569 level.
“Although local fundamentals recovered surprisingly fast post initial Covid-19 slump, reemergence of domestic coronavirus cases together with arbitrary second-wave theories gaining momentum in Europe and Western countries, despite impending development of a vaccine, kept performance of the local bourse mundane,” stated an AHL Research report. Trading kicked-off the week on a positive note on Monday even though the market blew hot and cold during the session. Investors took positive cues from international equities and oil markets as they cheered clarity in the US Presidential election.
The following day brought about some rather welcoming news as drugmakers Pfizer and BioNTech announced that an experimental Covid-19 vaccine was more than 90% effective based on initial trial results. Investors across the globe were euphoric as the development rejuvenated confidence of a global economic recovery. The news also spurred a rally in the oil market, which led to the index-heavy oil stocks posting handsome gains at the local bourse.
However, strong political noise amid the upcoming elections in Gilgit-Baltistan tempered the gains. Though the upward trend continued on Wednesday, choppy trading kept the index from posting any significant gains. Lack of positive triggers and political uncertainty influenced investors’ trading strategy.
The index was back in red on Thursday as the stock market snapped the three-day winning streak. Optimism over the vaccine faded as investors tracked surging Covid-19 cases across the country and weighed sentiments on possibility of a second national level lockdown if the trend persisted. A second lockdown would be detrimental for the country’s economy and is likely to hit growth figures severely.
Encouraging remittances data, which showed Pakistan attracting inflows of over $2 billion for the fifth successive month in October, also failed to entice investors.
However, the last trading day of the week got some reprieve from the selling pressure as investors were comforted the 4.8% growth in output of large-scale manufacturing (LSM) industries in the first quarter of the current fiscal year.
Among others, improvement in rupee-dollar parity and the country’s foreign exchange reserves also helped the index gain momentum.
Participation dipped as average volumes fell 21% in the outgoing week to 290 million shares, while value traded dropped 16% to $66 million.
In terms of sectors, negative contributions came from cements (161 points), oil and gas marketing companies (72 points), and power generation and distribution (61 points). On the flipside, major sectoral gains were observed in oil and gas exploration (161pts), commercial banks (83 points), and technology (34 points).
Scrip-wise, negative contributions were led by LUCK (76 points), HUBC (34 points), and SNGP (35 points).
Foreign selling continued this week clocking-in at $7.4 million compared to a net sell of $5.5 million last week. Selling was witnessed in commercial banks ($3.7 million) and cement ($2.7 million). On the domestic front, major buying was reported by individuals ($7.5 million) and banks/DFIs ($3.3 million).
Other major news of the week included; foreign exchange reserves held by the central bank increased $558 million to $12.7 billion, Pakistan may launch $1 billion Eurobond, foreign debt, liabilities increased to $113.8 billion in Q1, automobile sales during October increase 29% YoY and Ogra slashed losses allowed to SNGPL, SSGC for regasified LNG.
Published in The Express Tribune, November 15th, 2020.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.