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October 1, 2020

Stocks rout on COVID fears, political unrest

Business

October 1, 2020

Stocks fell on Wednesday amid fears that a possible spike of COVID-19 cases in Sindh may result in some smart lockdown, while tumbling world markets and political ferment also kept investors on the run, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 1.54 percent or 632.88 points to close at 40,571.48 points, while volumes increased to 473.730 million shares, compared to 353.650 million on Tuesday. Topline Securities in a note said, “Lackluster activity was observed during the initial hours of trade; however, the market came under pressure during the latter hours of trade.

This could largely be attributed to selling pressure in international markets along with political noise, the brokerage added.

Saad Rafi, head of equity sales at Al Habib Capital Markets, said, “Adhering to caution, financial institutions offloaded their positions, while expectations of higher inflation because of a spike in food prices also dampened hopes of a further cut in the interest rate”. Moreover, a recent jump in COVID-19 cases raised the fears of another micro/smart lockdown, which if imposed would hamper the economic recovery, he said.

KSE-30 also hit a low of 1.52 percent or 264.83 points to end at 17,205.34 points.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed sharply lower on concerns over global equity selloff and slump in crude oil prices”.

Foreign outflows, political uncertainty, and concerns over likely government action disfavouring private power producers to resolve circular debt issues dragged the index down despite energy ministry’s notification of special relief package for five exporting sectors, Mehanti added.

AA Soomro, managing director KASB Securities, said, “The rally from yesterday failed to carry itself on Wednesday as the market fell flat under massive selling pressure”.

He said with no sector- or company-specific bad news for the day, “we may attribute the fall to noisy political scenario expected in October”.

“Almost all the sectors including autos, refineries, oil marketing, and technology nosedived by the end of the day implying non-economic and other political concerns weighed on sentiment,” Soomro added.

Trading activity was recorded in 417 active scrips, of which 98 closed higher, 304 retreated, and 15 remained unchanged.

Muhammad Saeed Khalid, head of research at Shajar Capital, said, “The market slumped by more than 700 points during the day mainly on the announcement of below expected financial results of Ghandhara Group, Thatta Cement, and Silk Bank”.

Furthermore, the higher revenues posted by Unity Foods could not revive the sentiments and even positivity in Avanceon Limited failed to support the any intra-day recovery, Khalid added. Unity Foods announced its consolidated 4QFY20 result in which it posted an EPS of Rs.0.28. In its 4QFY20 result, Kohat Cement posted an LPS of Rs0.8, which was lower than street estimate.

Rafhan Maize, gaining Rs200 to close at Rs8,500/share, and Bata Pakistan, up Rs62.96 to finish at Rs1683.96/share, emerged as the top gainers, while Nestle Pakistan, down Rs100 to close at Rs6,600/share, and Island Textile, losing Rs73.50 to close at Rs906.50/share, suffered most losses in the day.

Hascol Petrol was on the top of the volumes chart with 86.628 million shares, up Rs1.52 to end at Rs20.18/share, while Pakistan International Bulk turnover was at the bottom with 10.937 million traded shares, down Rs0.55 to end at Rs12.36/share.