Despite a host of positive news reports, Pakistan bourse turned bearish on Thursday as the KSE-100 index shed 160 points primarily due to cabinet’s refusal to resume trade with India.
In view of shortage of sugar and cotton, the Economic Coordination Committee on Wednesday gave the go-ahead to economic managers to import the commodities from the neighbouring country. However, the cabinet did not endorse it.
In addition to that, rising Covid-19 cases across the country dented investor spirits as fears mounted of a nationwide lockdown. Many European nations also moved to either toughen the lockdown restrictions or impose a nationwide lockdown in wake of soaring infections.
The rupee’s rally against the US dollar where the local currency emerged as the best-performing global currency over the past three months failed to reverse the direction of the stock market.
Moreover, the news of Searle manufacturing a Covid-19 vaccine proved to be insufficient to lift investor sentiment. Though major sectors saw a sell-off, the fertiliser stocks outshined and major names closed with modest gains.
Earlier, trading began on a positive note, however, the leadership’s rejection to resume trade with India acted as a negative trigger and sparked sell-off at the stock market, which dragged it downwards.
After midday, an attempt was made to lift the market upwards, however, all the efforts went in vain as investors offloaded their stockholdings owing to anxiety over soaring virus cases.
At close, the benchmark KSE-100 index recorded a decrease of 159.75 points, or 0.36%, to settle at 44,428.1 points.
A report of Arif Habib Limited stated that the market traded range bound, oscillating between -254 points and +290 points. It ended the session down by 160 points.
“The federal cabinet’s decision not to import cotton yarn and sugar from India added to the confusion among investors, who had warmly welcomed the hint of it on Wednesday,” it said.
“On the other hand, leverage positions in tech and refinery stocks have persistently caused selling pressure in the market, whereby declining prices of pertinent stocks pushed the concerned investors to revisit the investment decision.”
Selling pressure was evident in cement, steel and bank sectors, which brought the index down by the end of the session.
The news of vaccine manufacturing by Searle helped its stock make a leap towards the upper circuit. Similarly, Engro hit its upper circuit on expectation of new investment in a polypropylene plant, the report said.
JS Global analyst Danish Ladhani said that the rollercoaster ride continued at the Pakistan Stock Exchange where the index hit intra-day high and low of +290 and -254 points to close at 44,428 (-160 points).
Total traded volume was recorded at 314 million shares where top contributors were Byco (-3.8%), TRG Pakistan (-6.7%), Ghani Global Holdings (+7.5%), Pakistan Telecommunication Company (-2.5%) and Unity Foods (-3.3%).
Technology and refinery sectors plummeted to close in the red due to selling pressure where Attock Refinery (-7.1%) closed near limit down whereas NetSol (-7.5%) closed at the lower circuit.
Moreover, Searle (+4.9%) in the pharma sector closed near the upper circuit as the company announced that it had successfully concluded an exclusive licensing and supply agreement with Livzon Mapharm.
“We expect the market to remain volatile ahead amid increasing corona cases, hence, we recommend investors to book profit on the higher side and wait for any sharp dips to accumulate value stocks,” the analyst said.
Overall trading volumes dropped to 313.5 million shares compared with Wednesday’s tally of 443.9 million. The value of shares traded during the day was Rs17.4 billion.
Shares of 391 companies were traded. At the end of the day, 102 stocks closed higher, 278 declined and 11 remained unchanged.
Byco Petroleum was the volume leader with 30.3 million shares, losing Rs0.4 to close at Rs10.06. It was followed by TRG Pakistan with 25.4 million shares, losing Rs10.06 to close at Rs140.15 and Ghani Global Holdings with 17.9 million shares, gaining Rs1.77 to close at Rs25.39.
Foreign institutional investors were net buyers of Rs194.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.