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Market under bearish spell on covid concern as KSE-100 index lost 9.9% wow
Summary

The week under review remained focused on Covid-19 developments, which daily appeared as heading of the newspapers. Monday: ‘Provinces seek Army’s assistance to enforce Covid SOPs’. Tuesday: ‘Sindh bans inter-city transport, closes educational institutions’. Wednesday: ‘Cambridge based exams postponed amid Covid cases surge’. Thursday: ‘Country sees record Covid deaths in single day’ and Friday: ‘Stay home, stay safe plan unveiled ahead of Eid’ are the headlines circulated during the week.

Investors sentiments remained at a low ebb throughout the week and persistent selling was observed on fear of possible reduced economic activity or lockdown. During the week KSE-100 Index shed 444.41 points to close at 44,262.35. The average volume was 332 million of shares. And the market capitalization declined by Rs.70 to stand at Rs.7.719 trillion.

Market made a rebound with an anticipation of new fund injection by Mutual Fund on Monday. There was persistent selling worth $7.72 by Mutual Fund during the last week but on Monday Mutual Fund turned buyers by $19.22m. The KSE-100 Index surged by 976.01 points and crossed the psychological barrier of 45,000 level to close at 45,682.77. Trading activity also improved significantly to 409m shares from 240m recorded last Friday. In the early session the Index tumbled 317 points on coronavirus fears. Aggressive buying was observed in OGDC, PPL and PSO all of which hit upper circuits at point. Buying was also seen in HBL and UBL which helped the Index post 1246 points after sustaining a loss of 317 points. Sectors contributing were E&P, Banks, Cements, Fertilizers and Pharma.

After a rally of 976 points on economic optimism on Monday, the fear of lock down returned to investors on provinces seeking Army’s assistance to enforce Covid SOPs. KSE-100 Index lost 389.90 points to close at 45,292.87 on Tuesday. The volume too declined to 367m shares from 409m the previous day. The major laggards were OGDC, PPL, Engro, PPL and PSO which brought down the Index by 261 points. The earning session was in full swing as ICI profit surges by 300 percent to Rs1.894 billion, Nestle took profit of Rs3.2 billion. Millat Tractors profit Rs.2.59 billion and PRL profit Rs536 million compared to a loss of Rs5 billion in 2020 same period. Telecards, Unity Foods, Flying Cement & Azgard Nine contributed 41% to total turnover.

On Wednesday KSE-100 Index lost 233.75 point to close at 45,059.12 due to lack of any effective positive trigger. IPPS urging government to make payment was deferred by ECC till the next meeting. Government mulling IPPs to shut them down. The selling pressure continued like Tuesday. Sectors contributing to negative performance included Banks, E&P, technology, cement and pharma. The volume declined to 306m.

After opening positive on Thursday, the Index oscillated both ways hitting intraday high of 84.33 points and low of 277.82 points. Finally it closed with a loss of 196.01 points to close below 45,000 level to 44,869.11. The volume further declined to 281m. Among scrips Hascol led with 44m followed by Ghani Global 33m and Telecard 20m shares.

On Friday the market high was 45,056.90 and low was 44,144.23. The Index finally settled to 44,262.35 a decline of 600.76 points. The market volume slightly improved to 294m.

Participants/Activity

Foreigners were net seller $13.12m during the week; companies were seller by $7.64m, Banks were seller $5.30m; Mutual fund net buyer $21.26m, individuals net seller $10.74m and Insurance were seller $2.82m.

Volume leaders during the were: 1) Telecard; 2)TRG Pak Ltd, 3) Unity Foods, 4) Ghani Global Ltd, 5) Hascol Ltd, 6) Azgard Nine, 7) Flying Cement, 8) World Call, 9) Silk Bank and 10) Ghani Global Glass.

Triggers

— The country’s foreign exchange reserves reached $23.52 billion on April 23 against the previous high of $23.098 billion recorded on FY16. SBP foreign exchange increased to $16.427 billion as it received #384 m during the week. The reserves of the commercial banks were slightly lower at $7.092 billion; a decline of 76m over the previous week.

— PM asks for formula to retire circular debt worth Rs900 billion while presiding over a cabinet meeting and expressed fear of circular debt might go up to Rs1.5 trillion by 2023.

— Housing finance goes up by record 36 percent. Bank housing and construction finance portfolio has increased from Rs148 billion by the end of June 2020 to Rs202 billion in March 2021. This represents a growth of Rs.54 billion or 36 percent in three quarters of FY21 compared to a stagnant position in the same period last year.

— ADB puts Pakistan growth rate at 2 percent during the current year subject to successful vaccine rollover and implementation of stabilization measures

— While speaking as chief guest at a ceremony on celebrating $1 billion mark in Roshan Digital Accounts, launching of Roshan Apni Car and Roshan Samaaji Khidmat through Roshan Digital Account the PM said “Tapping expatriates only way in absence of export boost.”

Conclusion

The newly appointed Finance Minister Shaukat Tarin after assuming power has chaired his first national price monitoring committee and made some observations and giving direction. He expressed dissatisfaction at the PBS and emphasized the need for improvement. He expect the Economic Advisory Wing to present a clear and accurate picture.

While participating in 77th session of United Nation Economic and Social Commission for Asia and the Pacific (UNESCAP ) titled “Debt Relief in the aftermath of the Pandemic: How can Regional Dialogue help”, the Finance Minister stated that at present Pakistan has resumed the IMF program and faced with the difficult choice to strike a balance between the need for fiscal consolidation and ever rising demand for economic stimulus amid Covid-19 and in post Covid scenario.

This is the wisest course Finance Minister has chosen.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi
Dated: April 30, 2021

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