Stocks plunge 1,042 points despite construction package

Updated April 07, 2020

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The big worry on the investors’ mind was surely the spike in the number of coronavirus cases in the country. — AFP/File
The big worry on the investors’ mind was surely the spike in the number of coronavirus cases in the country. — AFP/File

KARACHI: Stocks snapped four-day rally that was billed as the best ever weekly performance of the market in the last two decades. On Monday, the KSE-100 index tumbled by 1,042.64 points (3.30 per cent) and settled below the 31,000 level at 30,579.15.

Market opened on a positive note continuing the momentum generated last Friday and scaled up by 294 points. But value buyers decided to sell and wait for another dip which sent the index into a free fall until it touched an intra-day low by 1,043 points. Selling pressure was seen almost across the board.

The big worry on the investors’ mind was surely the spike in the number of coronavirus cases in the country and the government’s belief that the worst was yet to come.

To further dampen investors’ interest, after Moody’s downward revision of Pakistan’s GDP last week, the depressing confirmation came from the World Bank which also projected a decline in growth rate.

The much-awaited package for the construction sector announced by the PM on Friday failed to lift investors’ interest in the cement sector as positives were cancelled by a 16.8pc decline in total despatches year-on-year, which cemented investors’ belief of an economic recession looming large on the horizon.

The unexpected fall in global crude oil prices after the dispute among major producers failed to settle, sent the heavyweight oil and gas exploration and production shares reeling down.

Investors were also worried by a torrent of news on cancellation of export orders from foreign buyers.

Volumes declined from 251.8 million shares to 233.2m shares (down 7pc day-on-day). Average traded value also declined by 6pc to reach $52.2m as against $55.5m in the last session.

Stocks that contributed significantly to the volumes include Maple Leaf Cement Factory, Hascol K-Electric, Unity Foods and Pioneer Cement, which formed 35pc of total volumes.

According to Arif Habib Ltd, sectors contributing to the performance included banks, down 297 points, fertiliser 143 points, cement 121 points, power 93 points and oil and gas marketing companies 62 points.

Published in Dawn, April 7th, 2020