Market watch: PSX plummets on lockdown fears as Covid cases soar

KARACHI:

The Pakistan Stock Exchange on Monday came under intense selling pressure as the surging coronavirus cases rattled investors and pushed the benchmark index deep into the red with a drop of over 1,000 points.

The rising tally of Covid-19 infections across the country, particularly in Punjab, raised alarm in major sectors of the economy as well as the stock market. The government of Punjab on Monday announced smart lockdowns across various districts where the Covid-19 positivity ratio was 12% or higher.

The benchmark KSE-100 index seesawed as investors struggled to anticipate the impact of stringent measures being taken by the government in the wake of resumption of International Monetary Fund (IMF) loan programme.

The KSE-100 index started diving from the moment trading began and nosedived over 1,000 points to below 45,000 points. However, some buying activity at regular intervals helped the index recover the lost ground a little bit.

It still finished trading deep in the red as weak investor sentiment restricted it from entering the positive territory.

At close, the benchmark KSE-100 index recorded a decrease of 1,089.83 points, or 2.39%, to settle at 44,431.8 points.

Alpha Beta Core CEO Khurram Schehzad said that the market’s drop reflected investor concern over the worsening Covid-19 crisis in Pakistan.

“In the past few days, Punjab has been worst hit by the pandemic and market participants are now expecting a lockdown in the province,” he said. “Since Punjab contributes significantly to the economy, a lockdown will not bode well for the market and Pakistan as a whole.”

Endorsing his views, AA Gold Commodities Director Operations Adnan Agar said that skyrocketing Covid infections and looming fear of lockdown in Punjab dented investor sentiment at the bourse.

“Another factor fuelling the decline is the presidential ordinance, which will end tax exemptions for major sectors of the economy,” he said. “Such a move is not in favour of the market, hence a fall is being witnessed.”

JS Global analyst Maaz Mulla said a carnage was witnessed as the KSE-100 index lost 1,090 points. It closed the session at 44,432, down 2.4%. “This pressure in the market was partially due to the increasing Covid-19 cases in the country,” he said.

Positivity rates were already in double digits and well beyond those seen during the second wave while the absolute number of infections also dwarfed the second-wave levels.

Moreover, in later hours of trading, mutual funds redemption also dented investor sentiment.

Volumes stood at 524 million shares, where top contributors were Byco Petroleum (-7.9%), Pakistan Refinery (-7.3%), Azgard Nine (-0.1%), TRG Pakistan (-7.3%), Pakistan Telecommunication Company (-5.6%) and Unity Foods (-7.1%).

Selling pressure was witnessed in the refinery and technology sectors where Attock Refinery (-6.9%), National Refinery (-6.9%), Pakistan Refinery (-7.3%), Byco Petroleum (-7.9%), NetSol (-7.5%), TRG Pakistan (-7.3%) and Avanceon (-7.2%) closed at their respective lower locks.

The cement sector followed the same trend where Pioneer Cement (-5.8%), Cherat Cement (-5.3%), Maple Leaf Cement Factory (-3.7%), DG Khan Cement (-3.8%) and Lucky Cement (-2.3%) shed value.

“Going forward, we expect the market to remain bearish on the back of uncertainty amid the coronavirus pandemic and recommend investors to remain cautious,” the analyst said.

Overall trading volumes dropped to 523.9 million shares compared with Friday’s tally of 529.2 million. The value of shares traded during the day was Rs23.5 billion.

Shares of 408 companies were traded. At the end of the day, 37 stocks closed higher, 359 declined and 12 remained unchanged.

Byco Petroleum was the volume leader with 80.2 million shares, losing Rs0.91 to close at Rs10.63. It was followed by Pakistan Refinery with 48.96 million shares, losing Rs2.07 to close at Rs26.46 and Azgard Nine with 45.6 million shares, losing Rs0.02 to close at Rs38.17.

Foreign institutional investors were net sellers of Rs263.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.