Stocks likely to stay adrift amid COVID scares

Stocks failed to find a direction in the outgoing week owing to virus curbs related slowdown fears and are likely to stay that way down the line; however any positive development on the economic front may change the trend for the better, dealers said.

Equities remained dull throughout the week amidst resurgence in COVID-19 cases and calls for fresh round of lockdowns across the country.

Pakistan Stock Exchange's KSE-100 shares index declined 0.40 percent or 167 points during the outgoing week to finish at 40,569 points (WoW).

Muhammad Saeed Khalid, head of research at Shajar Capital, said, “We expect the Balance of Payment numbers along with the detailed announcement of trade numbers may likely revive investment sentiments in the market”.

“Furthermore, in the absence of result season, we believe the benchmark index to remain sluggish and just above the psychological level of 40,000 points,” Khalid added.

Ansreen Malik at Equity Desk of BMA Capital Management said, “Considering the appreciation of rupee against the greenback and improving macroeconomic indicators, we expect the market to remain upbeat in the coming week”.

“However, we still advise investors to remain cautious owing to the second wave of COVID-19 resurfaces and concerns over potential imposition smart lockdown,” Malik added.

Average volumes and traded value for the outgoing week were down by 21 percent and 16 percent to $290 million shares and $66 million shares, respectively.

Brokerage Arif Habib Limited in its weekly market report said, “The economic fundamentals are headed in the right direction, global rise in COVID infections (640,000+ cases reported in a single day) continues to pose threat of fresh lockdowns, which may crush our exports and damage the stability achieved on the external/currency front”.

However, control in local infection may revive sentiments, the brokerage added.

Investors remained jittery as the National Command and Operations Center (NCOC) recommended cluster-based lockdowns across the country, raising fears of further losses in national output.

New guidelines have been issued by the NCOC, which include limiting public gatherings to 500 people and restricting outdoor activities to 10 PM.

Globally, coronavirus infections in US and Europe soared to record levels with daily average cases going past the 100,000 mark.

However, the news that Pfizer has developed a COVID-19 vaccine, with 90 percent effectiveness in trials, sent global equities surging as Dow Jones index and S&P 500 index jumped 3 percent and 1 percent respectively.

Following the news, oil prices also jumped over 10 percent to break above the level of $40/bbl. Taking cues from the international equities, the local index gained 369 points on Tuesday.

However, the vaccine related optimism gradually waned ahead of increasing chances of lockdown restrictions in the country.

Foreign investors sold equities worth $7.4 million compared to a net sell of $5.5 million last week. Major selling was witnessed in commercial banks ($3.7 million) and cement ($2.7 million).

On the local front, major buying was reported by Individuals ($7.5 million) and banks/DFIs ($3.3 million).

Sector-wise negative contributions came from cements (161 points), oil & gas marketing companies (72 points), and power generation and distribution (61 points). Scrip-wise negative contributions were led by LUCK (76 points), HUBC (34 points), and SNGP (35 points).

Major sectoral gains were observed in oil and gas exploration (161 points), commercial banks (83 points), and technology (34 points).