Shares at the Pakistan Stock Exchange (PSX) were in free fall on Thursday with the benchmark KSE-100 index shedding more than 1,900 points, mimicking global markets after several countries announced restrictions to contain a second Covid-19 wave while authorities in Pakistan also imposed restrictions on commercial and social activities in 11 vulnerable cities.
The sell-off began with the opening bell as the benchmark, which had closed at 41,187 yesterday, lost over 1,400 points in the first seven minutes of trading. The trend continued and by 2:27pm in the afternoon, the market reached an intra-day low of 31,283, down 1,903 points – or 4.6 per cent.
However, in the late afternoon session the market reversed some of its losses, gaining 605 points from the day's low to end up at 39,888 – down 3.15pc.
In percentage terms, the last time the benchmark saw an equivalent single-day decline was earlier this year on March 17, days before the country went into its first extensive lockdown to curb the spread of the coronavirus.
"The market came under pressure today as international markets were also down due to a rising number of coronavirus cases," said Syed Atif Zafar, chief economist at Topline Securities.
“Cases in Pakistan are also rising with the ratio of new cases/daily tests edging up to above three per cent," he said, adding that significant foreign selling had also been seen over the last few days.
In the last three days, foreign investors have sold shares worth $15.85 million. Latest data released by the National Clearing Company of Pakistan showed foreign sellers offloaded their positions in cement, oil and gas exploration, and commercial bank stocks.
"The net outflow in the last three days can be attributed to good results by the stocks they hold in Pakistan, which made them increase their selling opportunistically," said Saad Ali, head of research at Intermarket Securities.
"Foreigners have been sellers for over three years in Pakistan now. Recently, they have also been trimming stocks in emerging and frontier markets," he said.
During today's sell-off, commercial banks, oil and gas exploration, cement, fertiliser and power generation, and distribution sectors were among the top losers.
"A bearish sentiment took over the equity market because of fears surrounding the likelihood of re-imposition of restrictions in the country and across the world and the economic contraction that it will cause," Ali said.
The uncertainty of how long these restrictions will last could keep the market in a pessimistic mood, he said. “Judging by how lockdowns affected the economy during the first wave, markets are responding to the news amid uncertainty on how long the second wave will last,” he added.
Earlier today, Planning and Development Minister Asad Umar said that the national positivity ratio was higher than three per cent on Wednesday for the first time in more than 70 days.
"NCOC has tightened restrictions on some high risk public activities. However, the rising spread of the disease can only be controlled if people believe in the need for precautions," he said.
A day earlier, the National Command and Operation Centre announced schedule for commercial and social activities in 11 cities which are most vulnerable to the deadly coronavirus.
Since 80 per cent Covid-19 cases are being reported in Karachi, Lahore, Islamabad, Rawalpindi, Multan, Hyderabad, Gilgit, Muzaffarabad, Mirpur, Peshawar and Quetta, commercial activities — markets, shopping malls, marriage halls and restaurants — will be closed at 10pm and amusement/public parks at 6pm daily from Thursday (today).