Index falls sharply as virus second wave fears surge

The index lost 1.4 percent on Monday, under heavy selling pressure on all fronts owing to an alarmingly rising Covid-19 infection rate, which might force the government to go back into lockdown mode across the country, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 1.38 percent or 554.66 points to close at 39,632.52 points level, while volumes increased to 195.467 million shares, as compared with the turnover of 189.857 million shares in the previous session.

KSE-30 shares index followed suit with a low of 1.24 percent or 209.85 points to end at 16,693.45 points level. Muhammad Saeed Khalid, head of research at Shajar Capital said, “The market remained on the downside, where mostly investors sold scrips in order to book capital gains.”

Investors remained cautious mainly on expected lockdowns in Pakistan, as the education minister has already announced closure of on campus classes in all educational institutes. Despite recovery in international crude oil prices, there was heavy selling in the oil scrips mainly Mari Petroleum, Oil and Gas Development Company, Attock Refinery Limited, Hascol and Pakistan Refinery Limited due to uncertainty over the recovery of consumer demand globally, Khalid added.

AA Soomro, managing director at KASB Securities said, “The index nosedived as rising cases over the weekend prompted the prime minister to consider imposing lockdown.” The mere mention of lockdown by the PM through a tweet created jitters. “National infection rate has topped seven percent and is rising. Thus, short-term investors created selling pressure and opted to wait and watch,” he said.

By the close of the market, the Monetary Policy Statement was announced where the policy rate was kept unchanged. This was in line with expectations; however, the market was expected to remain choppy in the next few days with no immediate triggers, Soomro added.

The IMF talks and circular debt resolution remain the much-awaited catalysts. Trading activity was recorded in 382 active scrips, of which 63 increased, 297 lost, and 22 remained unchanged.

Fahad Rauf, deputy head of research at Ismail Iqbal Securities said equities remained under pressure as active cases crossed 38,000 mark. Government had already imposed multiple smart lockdowns in major cities, while all educational institutes would be closed from November 26.

On the economic front, SBP kept interest rates unchanged at seven percent. "Banks, cement, and oil marketing companies cumulatively dragged the index by 248 points,” Rauf added. Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bearish amid thin trade amid consolidation in the post earnings season, and uncertainty over outcome of Pakistan-IMF talks over resumption of Extended Fund Facility during covid.”

Investor concerns over global equity selloff, foreign outflows and rupee instability played a catalytic role in the bearish close, Mehanti added. Top gainers were Rafhan Maize, gaining Rs150.00 to close at Rs8,450.00/share, and Sapphire Fibre, up Rs60.00 to finish at Rs975.00/share.

Bata Pakistan, down Rs44.00 to close at Rs1,371.00/share, and Siemens Pakistan, losing Rs42.97 to close at Rs532.03/share, were the main losers. With 15,418 million shares, Unity Foods Limited was on the top of the volumes chart. It lost Re0.6 to end at Rs23.12/share. Sui Northern Gas turnover with 4.807 million traded shares was at the bottom, and it lost Rs2.49 to end at Rs42.64/share.