The stock market continued its descent on Wednesday, following a short-lived recovery a day ago, and fell 451 points owing to weak economic cues.
In its report titled Pakistan Development Update – Navigating in Uncertain Times, the World Bank painted a bleak picture of Pakistan, reporting a rise in unemployment and poverty due to Covid-19, which dented investor sentiment.
It also anticipated that the economy would grow 1.3% in the ongoing fiscal year compared to International Monetary Fund’s projection of 1.5% economic expansion for Pakistan.
Adding fuel to the market’s slide, Covid-19 infections in Pakistan were on the rise that signalled a further slowdown of the economy and hurt investor interest.
Owing to the negative triggers, market participants resorted to across-the-board selling due to which index-heavy automobile, cement, fertiliser, financial and oil sectors ended the day with substantial losses.
Following a brief open in the positive, the KSE-100 index entered the negative zone in initial trading. Throughout the day, the index fell at a steady pace on negative news flow. Late session buying helped erase some of the losses.
At close, the benchmark KSE-100 index recorded a decrease of 451.12 points, or 1.02%, to settle at 43,953.58 points.
Arif Habib Limited, in its report, stated that the KSE-100 index lost 647 points during the day after posting intra-day gains of 930 points a day ago. It closed the session down by 451 points.
Banking, exploration and production, and fertiliser sectors remained under selling pressure whereas technology and refinery sectors saw mixed reaction from investors.
Different factors were at play that led to negative sentiment including the projection of a muted growth in the financial sector results and decline in international crude oil prices.
The cement sector performed well earlier in the session, however, the change in overall sentiment brought its stocks down, the report added.
JS Global analyst Danish Ladhani said that KSE-100 remained volatile as it touched a high and low of +167 and -647 points respectively. It finally closed at 43,954 (-451 points).
Total traded volume for the day was recorded at 371 million shares. Financial and fertiliser stocks were the major laggards, among which HBL (-2.8%), Engro (-2.3%), Bank AL Habib (-4.3%), Fauji Fertiliser (-2.1%) and UBL (-2.4%) closed in the red.
“Moving forward, we expect the market to remain volatile and recommend investors to view any dips as a buying opportunity in the cement and steel sectors ahead of the results season,” he said.
Overall trading volumes rose to 370.5 million shares compared with Tuesday’s tally of 305.96 million. The value of shares traded during the day was Rs20.3 billion.
Shares of 391 companies were traded. At the end of the day, 133 stocks closed higher, 239 declined and 19 remained unchanged.
TRG Pakistan was the volume leader with 38.3 million shares, gaining Rs1.09 to close at Rs138.13. It was followed by Dost Steels with 30.3 million shares, gaining Re1 to close at Rs6.17 and Azgard Nine with 22.9 million shares, losing Rs0.01 to close at Rs33.05.
Foreign institutional investors were net sellers of Rs1.6 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.