KARACHI: The stock market witnessed bloodbath on Monday as investors dumped shares, panicked by the sinking values as the country was rocked by the third wave of Covid-19.

After five months, the KSE-100 index lost more than 1,000 points in a day to plunge by 1,090 points, or 2.39 per cent, to close at 44,432. A sum of Rs192 billion was washed away from market capitalisation.

As the spectre of pre-March 2020 meltdown of the market on fears of devastation and lockdowns raised its ugly head with the infection rate particularly in Punjab and KP rising to a fearful double digits, investors shifted from risky equities to safe havens.

The massive breakout in infection cases has spurred authorities to clamp lockdown in major cities including Lahore and Gujranwala. Investors feared a slowdown in movement of goods to the north, hitting corporate sales and profitability.

Raza Jafri, head of Equities at Intermarket Securities, said that among other reasons that drove away investors included negative news flow relating to delay in the payment of the first instalment to IPPs, which were expected before the end of March.

The market was also concerned about the delay in the declaration of the new refinery policy given that heads had rolled at the ministry concerned. Mr Raza said rumours of mutual funds’ selling to meet redemption intensified selling pressure.

The figures released by the National Clearing Company of Pakistan, however, revealed that the major market participants that dragged the index down were foreign investors selling shares worth $1.72m; panicky individuals who jettisoned stocks valued at $4.73m and brokers proprietary trading liquidations of $3.52m worth shares. Com­p­anies, banks and insurance companies mopped up the liquidity while mutual funds sold shares of net small sum of $0.54m. Traded volume on Monday stood at 524m sha­res, where top volume contri­butors were Byco, PRL, ANL, TRG, PTCL and Unity Foods.

Moreover, investor sentiments were dented by the withdrawal of some tax exemptions to meet the IMF conditions on resumption of $6bn IMF’s Extended Fund Facility. Zulqarnain Khan, executive director at Next Capital, said that one of the reasons for a massive market fall was the inability of some leveraged investors to settle last Friday’s rollover positions by mid-day on Monday, leading to sell-off of their positions in the ready market. The domino effect saw shares fall like ninepins. He believed that the situation should ease by Tuesday which could put market back on track.

Although red was splashed all across the sectors, refineries, technology and cement companies—that were at the head of the bull market took the major battering on Monday.

In the refinery sector, Attock, National, Pakistan Refinery and Byco—all closed at their lower circuits. In the technology sector, the individuals’ favourite Netsol, TRG and AVN also closed at the day’s maximum loss. On the cement sector Pioneer, Cherat, Maple Leaf, D.G. Khan and Lucky lost values in varying amounts.

Scrip-wise the biggest laggards were TRG, Lucky Cement MCB Bank, Hubco and Habib Bank that cumulatively dragged the benchmark index down by 319 points.

Published in Dawn, March 30th, 2021*