Stocks sink on political risks; corona angst lingers

Stocks again meandered on Thursday as a continued rise in coronavirus cases dashed hopes of a recovery from the pandemic-induced economic slump, while escalating political tension heaped pressure on inventors portfolio, dealers said.

They said the market witnessed another massive sell-off and most of the active stocks in refineries, technology and autos ended at their lower circuit breakers.

Pakistan stock exchange (PSX) KSE-100 shares index shed 2.09 percent or 911.92 points to close at 42,779.76 points. KSE-30 shares index shed 2.54 percent or 464.65 points to close at 17,861.20 points.

As many as 351 scrips were active of which 47 advanced, 351 declined and 10 remained unchanged. The ready market volumes stood at 406.1 million shares compared with the turnover of 363.24 million shares in the last trading session.

Brokerage Topline in a post market note said the sell-off in equities continued for the fourth straight day with the benchmark index closed at a level last seen on December 20, 2020.

"Cumulatively the past four trading sessions have eroded 3,058 points which was last seen when the lockdowns were announced in March 2020." Analysts said higher cut-off yield in Wednesday’s T-bill auction (+25-35bps), rising covid cases and increasing political noise kept market under pressure.

They added stocks closed bearish post earnings season amid pressure in scrips across the board on investor speculations ahead of results of senate chairman election.

“Oil and banking scrips outperformed on surging global crude oil prices, strong financials. Uncertainty over outcome of new IMF conditions before approval of $6 billion EFF reinstated program, rupee instability and concerns for likely surge in power tariff impacting industrials played a catalytic role in record fall witnessed at PSX,” an analyst said.

Though Federal Board if Revenue (FBR) gave clarification on withdrawal of tax exemptions, the investors remained perturbed in anticipation of levy of additional taxes that made the leveraged investors closing their positions at market rates rather than meeting the margin requirements.

Maaz Mulla at JS Global Capital said yet another bloodbath was witnessed on prevailing political uncertainty due to senate elections and fears of any potential measures that might be taken due to recent increase in "covid cases weakened investor sentiment".

Oil and Gas Development Company declined 4.3 percent, Habib Bank declined 2.0 percent, Lucky Cement was down 1.7 percent, ENGRO slipped 1.5 percent, Hub Power shed 1.8 percent, and TRG Pakistan down 7.5 percent were among major laggards that dragged the index down by 349 points.

Technology and refinery sectors witnessed heavy selling pressure including NETSOL, AVN, Attock Refinery, Pakistan Refinery closed at their lower locks of 7.5 percent while National Refinery closed 6.6 percent in negative.

“Moving forward, we expect bearish sentiment in the market to continue on the back of political uncertainty and potential redemptions in Mutual Funds. Hence, we recommend investors to remain cautious,” Mulla said. Companies reflecting highest gains include Wyeth Pakistan up Rs26.83 to close at Rs935/share and Murree Brewery up Rs20 to close at Rs560/share.

Companies reflecting most losses include Nestle Pakistan down Rs237.5 to close at Rs5,710.5/share and Sunrays Textile down Rs81.75 to end at Rs1,008.25/share.

Highest volumes were witnessed in Unity Foods with a turnover of 34.88 million shares. The scrip shed Rs2.04 to close at Rs25.29/share. TRG Pakistan was second with a turnover of 27.08 million shares. It shed Rs9.75 to close at Rs120.33/share. Hum Network was third with a turnover of 21.53 million shares. It lost 39 paisas to finish at Rs5.75.