Stocks battered by post-budget pessimism

Stocks sank on Monday after perplexed investors registered their protest against the capital market-evading Federal Budget 2020-21 by going on a selling spree amid a weakening international crude oil market and a worsening COVID-19 situation at home, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 2.27 percent or 786.72 points to close at 33,824.51 points level. KSE-30 shares index followed suit with a low of 2.49 percent or 375.22 points to end at 14,663.61 points level.

Topline Securities in a note said, “The market opened on negative note as investors were distressed with the lack of capital market relief measures announced in the budget, while Punjab health minister’s press conference regarding lockdown in most affected areas of province raised concerns”.

The decline in international oil prices led the decline in hydrocarbon exploration and production companies (E&Ps), the brokerage said adding that financial sector along with E&Ps were the main laggards in Monday’s trading session.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “Budget announcements were against the market expectations as there was no major relief in the shape of capital gain tax schedule, moreover as per practice there was hope the corporate tax would be reduced, which also failed to materialise”.

Another important factor was decline in crude oil prices and fall in major global capital markets showing that foreign outflows continued in the region, Ahmad added. Of 355 active scrips, 84 gained, 250 suffered losses, while 21 remained unchanged.

The ready market volumes stood at 262.839 million shares, as compared with the turnover of 177.883 million shares in the previous session.

Tahir Abbas, Head of Research at Arif Habib Limited, said, “The continuous increase in COVID-19 cases in the country where news of several hotspots identified in the major cities baffled the investors".

“Rise in cases hints the government might opt for lockdown, which would slow down the economic cycle; however, the government appears a bit hesitant for any harsh lockdown.” In addition to this, Abbas said drastic decline in international oil prices tagged with sell-off across-the-board in the regional markets added pressure to the local bourse.

Shahab Farooq, director research at Next Capital, said, “The market came under pressure as the budget lacked excitement for the market in general”. He said all the leading blue-chip stocks were under pressure with thin activity, Farooq said, adding that concerns over intensity of COVID-19 spread also dampened investor sentiments.

The top gainers were Rafhan Maize, up Rs115 close at Rs7,015/share, and Indus Dyeing Rs20.50 to finish at Rs595/share. Pakistan Tobacco, down Rs67.25 to close at Rs1,533/share, and Sapphire Fibre Rs44.52 to close at Rs701/share, were the main losers.

Unity Foods Limited led volumes with 45.382 million shares and it gained Rs0.29 end at Rs12.96/share. The lowest volumes were witnessed in Siddiqsons Tin, whose only 6.953 million shares changed hands, whereas the scrip lost Rs0.28 to end at Rs9.75/share.