PSX sinks further 6.75 percent with rising panic on coronavirus, lockdown fears

KARACHI: Stocks slumped more than 6.5 percent -- worst ever decline in eighteen years -- on Wednesday, with panic selling from local as well as foreign investors intensified on coronavirus fears, dealers said.

“Panic selling was observed at the local bourse as index saw its worst ever decline in eighteen years,” brokerage Topline Securities said in post market note.

“(An interest rate cut) was completely ignored by the investors as fright over suspension of economic activity amid increasing number of coronavirus cases in the country weighed down on their sentiment.”

The market saw its fifth halt in last eight trading days when the KSE-30 index fell 8.2 percent in the intraday trade. Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 6.75 percent or 2,200.88 points to close at 30,416.05 points level. KSE-30 shares index followed suit with a low of 7.49 percent or 1,071.95 points to end at 13.249.13 points level. Of 363 active scrips, 20 up, 336 retreated, and 7 remained unchanged.

The ready market volumes stood at 186.654 million shares, as compared with the turnover of 240.379 million shares in the previous session. Limited participation was observed in the market as trading volume and value declined by 23 percent and 53 percent on day-to-day basis respectively.

In the last three sessions, KSE-100 declined 5,645 points or 15.7 percent, which is the highest three-day decline in the history. However, it the highest three-day decline in percentage term since June 1, 1998, when the index plunged 21.7 percent.

Samiullah Tariq, director research at Arif Habib said several rating agencies terming the world entering recession development after corona virus deter fresh investment in global markets which also have an impact on the local market, with the index suffered colossal losses in the last three sessions.

“The interest rate cut came below the estimates of the investors which resulted in heavy selling in the shares having leverage,” Tariq said. Naushad Chamdia, CEO, Standard Capital Securities suggested that circuit breakers limit could be lowered to stop nerve-wrecking decline.

“Secondly, the government needed to act now by giving much-needed stimulus since situation arising out of coronavirus is far reaching which has hampered demand side badly. This means revenue side of businesses will be brutally hit,” Chamdia said.

“The government must act with stimulus package such as curtailing interest rates even further to the extent to stimulate demand side and also curtailing cost of doing business.”

Salman Ahmad, head of institutional sales at Aba Ali Habib said the market underwent heavy selling pressure mostly in the leverage stocks as investors before the monetary announcement several made fresh deals in the cement, steel and other companies.

“But the announcement came other than expectations resultantly the market went down speedily,” Ahmed said. “Moreover, panic like situation owing to corona virus and different rumors of total shut down also made investors bit hesitant to place fresh commitment in the stock market despite quite attractive levels.”

The top gainers were Sapphire Textile, up Rs59.62 close at Rs868.99/share, and EFU Life Insurance Rs13.02 to finish at Rs193.96/share. Bata Pakistan down Rs112.15 to close at Rs1424.76/share, and Mari Petroleum down Rs76.49 to close at Rs943.41/share, were the main losers.

K-Electric Limited recorded the highest volumes with a turnover of 25.474 million shares. Whereas the scrip lost Rs0.35 end at Rs2.88/share. The lowest volumes were witnessed in ENGRO Fertiliser recording a turnover of 4.127 million shares, whereas the scrip lost Rs4.31 to end at Rs53.38/share.