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October 30, 2020

Stocks lose 1,300 points on lockdown noise

Business

October 30, 2020

Stocks went into a freefall on Thursday after authorities toned up the rhetoric regarding re-enforcing restrictions in the wake of a second COVID-19 wave, terrorising investors into indiscriminate selling amid international equity and oil market tailspin, dealers said.

The KSE-100 shares index, the benchmark of Pakistan Stock Exchange (PSX), lost a massive 3.15 percent or 1298.86 points to close at 39,888 points, while trading volume increased to 541.779 million shares, compared to 368.423 million in the previous session.

KSE-30 shares index shed 3.16 percent or 546.72 points to end at 16,750.37 points level.

Topline Securities in a note said, “The quantum of decline seen today (Thursday) was last observed in March 2020 where 1,336pts were lost in a single day soon after the announcement of the first lockdown”.

The brokerage said a less severe announcement was of a smart lockdown yesterday (Wednesday) which exacerbated with international markets selloff, declining oil prices and the rollover week.

Ahsan Mehanti from Arif Habib Corporation, said, “Stocks slumped on global equity selloff and panic over likely weak economic growth amid fears of second wave of COVID-9 pandemic”.

Plunge in global crude oil prices, foreign outflows and economic uncertainty wreaked havoc on stocks, Mehanti added.

Trading activity was recorded in 422 active scrips, of which only 47 saw an uptick, 368 suffered losses, and seven remained unchanged.

Tahir Abbas, director research at Arif Habib Limited, said, “The second wave of coronavirus in Pakistan raised fears of re-imposition of smart lockdowns and restrictions, which dented investor sentiment and dragged the index down 4.5 percent at one stage”.

Economies were again seen losing ground and the worst hit were the commodities across the globe specially petroleum products, impacting the crude oil price, which suffered a drop of more than 2 percent, Abbas added.

Muhammad Saeed Khalid, head of research at Shajar Capital, said, “The market plunged where KMI-30 index lost 3,500 points during the day”.

"The market slumped mainly on the uncertainty prevailing over the upsurge of COVID-19 infections in the country along with the global equity selloff following the rise of re-infections in the Western and Asian countries,” he said.

Investors sold off their wealth leading the foreign selloff in the equity market after some Islamophobic incidents created tensions between Islamic and Non-Islamic countries, Khalid added.

Shahab Farooq, director research at Next Capital, said, “The KSE-100 index went through a massive selling pressure losing 3.2 percent”.

The correction was in line with the global equity markets that were on the decline because of the fears of a second wave of the pandemic, he said.

"Across-the-board selling was witnessed in the market, with a wave of recovery during the final hour as value investors spun into action,” Farooq added.

The top gainers were Sapphire Textile, up Rs43.13 to close at Rs823.25/share, and Pakistan Tobacco, up Rs42.36 to finish at Rs1650.00/share, while Unilever Foods, down Rs1,000 to close at Rs12,900/share, and Bata Pakistan, down Rs111.25 to close at Rs1,588.75/share, were the main losers.

Unity Foods Limited, down Rs0.27 to end at Rs22.90/share, was on top of volumes chart with 60.515 million shares, whereas K-Electric Limited, down Rs0.1 to end at Rs3.73/share, was at the bottom with 12.529 million shares.