A turbulent week at the Pakistan Stock Exchange (PSX) ended with a 600-point slump to settle at 44,707 points on back of rising Covid-19 infections across the country, fuelling fear of another nationwide lockdown.

“While political noise subsided slightly this week, increasing Covid cases kept investors cautious of fresh buying, as the government warned of amplified steps, including lockdowns, to control the spread of the virus,” said JS Global analyst Ahmed Lakhani.

The KSE-100 index kicked off Monday on a bearish note as the distressing political situation building up from last weekend (protests and sit-ins by Tehreek-e-Labbaik Pakistan across the country and a series of failed negotiations with government) weighed on investor sentiment.

Read: Pakistan’s can-maker applies for PSX listing

However, the following session saw bulls stage a comeback at the PSX owing to the much-awaited resolution of political dispute and negotiations between the government and protesters. Fuelling the rise, upbeat financial results also encouraged investors to assume fresh positions that helped sustain the buying momentum.

The remaining trading sessions of the week saw the index dive into the negative territory as Covid-19 cases continued to mount across Pakistan. Investors took cues from the gloomy Covid situation in neighbouring India and chose to remain on the sidelines fearing imposition of a nationwide lockdown if the rising trend in Pakistan persisted. Stringent restrictions by the National Command and Operation Centre (NCOC) in the wake of climbing virus numbers acted as a catalyst for the downtrend in the stock market.

Towards the end of the week, Prime Minister Imran Khan warned of a complete lockdown if the public continued to flout standard operating procedures (SOPs) which dampened investor sentiments. A complete lockdown would result in disastrous effects on the economy which has just begun to show signs of recovery.

“Third wave of the novel coronavirus (more lethal than the last two) remains a key risk for the market,” stated a report from Arif Habib Limited. “We do highlight that strong result season appears to be a solid indicator of the economic and corporate recovery hence, we advise market participants to cherry pick blue-chip companies with strong fundamentals.”

Average daily traded volume dropped 10% week-on-week to 333 million shares while average daily traded value declined 3% week-on-week to $97 million.

Read more: Foreign investment in PSX halves in 4 years

In terms of sectors, contribution to the downside was led by oil and gas exploration companies (210 points), cement (78 points), power generation (93 points), chemical (79 points) and oil and gas marketing companies (77 points). Whereas sectors that contributed positively include commercial banks (160 points) amid strong result outcomes, technology (58 points) and fertiliser (28 points).

Scrip-wise, major losers were Oil and Gas Development Company (96 points), Hubco (76 points), and Pakistan Petroleum (56 points) while top positive contributors were TRG Pakistan (118 points), Engro (77 points) and HBL (60 points).

Foreigners accumulated stocks worth $7.3 million compared to a net sell of $0.9 million last week. Major buying was witnessed in technology and communication ($4.8 million) and commercial banks ($2.42 million). On the local front, selling was reported by mutual fund ($7.73 million) followed by companies ($5.35 million).

Among other major news of the week; SBP reserves fell $63 million, Rs800 billion have been proposed for PSDP in budget 2021-22, UK pledges support for Pakistan on FATF front and government raised Rs708 billion.

Published in The Express Tribune, April 25th, 2021.

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