PSX losses deepen as smart lockdown stokes slowdown fears

Stocks on Thursday saw their losses deepening amid renewed fears of economic slowdown as parts of country went under targeted lockdown, while the rest of sentimental damage was done by dismal manufacturing numbers for the month of April, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.91 percent or 308.83 points to close at 33,539.85 points, while KSE-30 shares index followed suit with a low of 1.17 percent or 171.48 points to end at 14,461.31 points level.

Brokerage Topline Securities said the government authorities imposed smart lockdown in several coronavirus hotspot in Karachi, which again posed questions about overall productivity. “The notion was further compounded by released of Large-Scale Manufacturing (LSM) numbers which depicted decline of 32.85 percent month-on-month and 41.89 percent year-on-year,” the brokerage said.

Shahab Farooq, director research at Next Capital, said, “The positive momentum was broken Wednesday with the announcement of separation of an ally party with the government”.

The market continued to lose because of an absence of positive triggers at present, Farooq said. “Focused lockdowns in Karachi after some areas being sealed in Lahore on Wednesday, to prevent the spread of COVID-19, also dampened investors’ sentiments,” he said.

Of 364 active scrips, 97 moved up, 239 down, and 28 remained neutral. The volumes shrank to 216.225 million shares, as compared to 340.855 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations, said, “Stocks closed lower amid pressure in the post-budget sessions on concerns over weak earnings outlook”. Textile stocks outperformed on 86 percent month-on-month surge in exports in May 2020, Mehanti said.

“Dismal data on year-on-year exports for May, investor concerns over prevailing economic uncertainty amid surging pubic debt data surpassing Rs34trn and concerns over 42pc YoY falling dismal LSMI data in April’20 played a catalyst role in bearish close, Mehanti added.

Tahir Abbas, Head of Research at Arif Habib Limited, said, “Rise in COVID-19 cases in the country mostly centred around Karachi perturbed the investors as several areas in the city are expected to be sealed from Thursday. It left investors fearing the economic activities to slow down further in case it was prolonged, Abbas said.

“Moreover, latest numbers presented the industrial activity was hit by a heavy jolt as it declined 42 percent in April, which also hit the revenue collection,” Abbas added.

Zia Shaafi, Senior investment advisor at Inter-Market Securities, said, “For the last two sessions bears have been tightening their grip on the mainly because of a lack of positive triggers”. Index was looking bit sideways and might test 33,000 points levels; however, any positive development on the economy or political fronts might help index recover some lost grounds, Shaafi added.

Sateesh Balani director research at Ismail Iqbal Securities, said equities remained under pressure as the government opted for smart lockdown in different parts of the country starting from Thursday. “The political uncertainty also kept investors' sentiments in check,” Balani said.

The top gainers were Indus Dyeing, up Rs43.99 close at Rs642.99/share, and Premier Sugar, gaining Rs21.95 to finish at Rs314.65/share, while top losers were Phillip Morris Pakistan, down Rs144 to close at Rs1,875/share, and Colgate Palmolive, losing Rs27.57 to close at Rs2,210/share.

Unity Foods Limited changed most hands with 23.975 million shares and lost Rs0.43 to end at Rs11.61/share, while TRG Pakistan Limited saw the least turnover with 4.808 million shares, losing Rs0.63 to end at Rs25.79/share.