Difficult week at PSX closes with lockdown

KARACHI: It was a dreadful week for the stock market as the index threatened to break the 47,000 barrier but managed to close at 47,055 points, representing a steep drop of 738 points or 1.54pc. The market witnessed massive selling in four of the five trading sessions.

The tone of performance all through the outgoing week was set entirely by the Covid pandemic. The daily escalating cases of new infections and deaths struck fear in the hearts of the investors and the authorities. Short-term investors liquidated their positions and preferred to sit on cash. Towards the end when the caseload in Sindh shot through the roof at 25pc, dramatic developments were witnessed on the last trading day when the stock prices hit the ceiling in the first half, but reversed the bullish trend in the second half to end deep in the red due to panic-selling by investors on announcement of strict lockdown by the Sindh government.

The only positive point in the week was the announcement by the State Bank of Pakistan to keep policy rate unchanged at 7pc to promote economic growth. Moreover, the IMF revised upwards Pakistan’s growth forecast to 3.9pc for FY21.

Foreign investors sold shares worth $5 million against stocks offloaded at $21m the previous week as the latter represented sell-off of shares in Byco by Abraj Capital. Major outflow was witnessed from the commercial banks at $2.94m. Among local participants, banks bought shares worth $6.30m followed by mutual funds which purchased stocks valued at $2.43m. Traded average daily volumes went up by 29pc to 405m shares.

Sector-wise, cements came under heavy battering throughout the week, representing loss of 212 points followed by commercial banks 178 points; oil and gas exploration companies 58 points and pharmaceuticals 53 points. Scrip-wise leading the laggards were LUCK (118 points), TRG (62 points), MCB (60 points), PSO (45 points), and HBL (44 points).

Going forward, investors foresee the market trend between hope and apprehensions. The strict lockdown put in place by the Sindh government for a week would inevitably results in disruption of business and industrial activities. Interestingly, vehement opposition by the federal government and traders’ community to the current complete lockdown is likely to force the Sindh government roll back some of the toughest measures. Meanwhile, increased Covid vaccinations are a positive sign. The uncertainty could keep investors off the market at least in the earlier part of the week.