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Stocks fall on fears of another lockdown; rollover weighs


May 29, 2020

Stocks succumbed to selling pressure on Thursday, the first session after Eid holidays, mainly owing to fears the government was mulling tightening the lockdown following a post-softening spike in COVID-19 cases, while an only two-day future rollover also weighed down on trade, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.42 percent or 141.19 points to close at 33,695.42 points and KSE-30 hit a low of 0.67 percent or 98.99 points to end at 14,648.61 points.

Topline Securities in a note said, “This negativity can be attributed to news flow that suggested the government is contemplating on next step amid rising COVID-19 cases, current account deficit that clocked in at $572 million in April 2020 compared to $9 million in March 2020, and also due to only two trading session available to settle May 20 open position in volatile trade”.

Shahab Farooq, director research at Next Capital said, “The market remained range-bound in the negative territory throughout the day with thin activity amid short future rollover”.

Of 335 active scrips, 148 ended higher, 162 closed lower, and 25 remained unchanged. The ready market volumes stood at 194.742 million shares, as compared to 147.213 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations, said, "Stocks closed lower on prevailing prebudget uncertainty and slump in global crude oil prices”.

Rupee instability, dismal data for oil, autos and cement sales in April 2020, concerns over ongoing foreign outflows, and economic uncertainty weighed on the PSX, Mehanti added.

A leading analyst said buying spree in cement sector continued on hopes the government’s plan to construct Diamer Basha Dam would improve sales, which would also help improve margins of the sector.

Moreover, sentiments also improved on expectations of some relief for the cement sector in the coming budget as the government was planning to get the Naya Pakistan project, aimed at providing shelters to homeless, off the ground.

Sateesh Balani, director research at Ismail Iqbal Securities, said, “The equities remained volatile due to limited trading time for settlement of May 20 futures (two days week only), while investors fear another round of lockdown due to rising COVID-19 cases”.

“Index heavyweights, banks, E&Ps (exploration and production) and fertilisers dragged the index, cumulatively shedding 165 points,” Balani said.

Ovais Ahsan, chief executive officer at Optimus Capital Management, said, “The market slipped into the red zone on selling pressure because there only two trading days were left for rolling over futures contracts”.

Investors were also cautious due to expectation of an increase in COVID-19 infections due to Eid holidays and general easing of the lockdown, Ahsan said, adding a general risk-off mode also prevailed ahead of the budget expected next month.

Rafhan Maize, up Rs449 close at Rs7,349/share, and Sapphire Textile, gaining Rs56.92 to finish at Rs815.92/share, emerged as the top gainers of the day, while Colgate Palmolive, down Rs50 to close at Rs2,200/share, and Sanofi-Aventis, losing Rs27.13 to close at Rs884.87/share, were the main losers.

TRG Pakistan Limited was the volume leader with 24.750 million shares and gained Rs1.93 to end at Rs27.68/share. The lowest volumes were witnessed in Engro Fertilizer that recorded a turnover of 3.410 million shares, but it lost Rs1.21 to end at Rs60.10/share.