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Weekly Review: coronavirus spread likely to haunt stock market
A sign of the Pakistan Stock Exchange is seen on its building in Karachi, Pakistan January 11, 2016. REUTERS/Akhtar Soomro/File Photo

Weekly Review: coronavirus spread likely to haunt stock market

KARACHI: The spread of coronavirus likely to haunt the stock market in the coming week as it had already dented massively.

Analysts at Arif Habib Limited said that with panic and uncertainty looming over the extension of Coronavirus, global markets are yet to ascertain long term impact.

“We do highlight that international markets have fallen significantly from their all-time high levels whereas the local index had already undergone major correction prior to spread of the virus.”

Announcement of Monetary Policy in the coming week remains a key event for the market, where we expect the SBP to cut the benchmark rate by 50-100 basis points, which can be a positive trigger for the bourse.

With that said, valuations across the board particularly in blue-chip scrips have reached attractive levels.

The market commenced on a negative note on Monday amid sharp decline in oil prices (Arab Light down by 27 percent DoD) after OPEC and Russia failed to agree upon oil production cut and Saudi Arabia engaged in an oil price war, consequentially, the market nose-dived by 2,302 points during the intraday.

The following day, the equity bourse displayed a swift rebound owed to expectations of a cut in interest rate, keeping in view decline in inflation.

However, the sentiment was short lived as Pak Rupee depreciated against USD by 3 percent WoW. Furthermore, the US President imposed a travel ban on most European countries which led to a meltdown in Global Markets given classification confirmation by WHO of Corona as a pandemic.

Following suit, panic was also witnessed at the KSE-100 Index (market halt enforced thrice during the week). The benchmark KSE-100 Index of Pakistan Stock Exchange (PSX) closed at 36,061 points, down 2,159 points WoW (-5.65 percent).

Sector-wise negative contributions came from i) Commercial Banks (706 points), ii) Oil & Gas Exploration Companies (650 points) and iii) Fertilizers (317 points).

Positive contributions came from Pharmaceuticals (35 points). Scrip-wise negative contributions were led by PPL (262 points), HBL (177 points), and ENGRO (167 points) while positive contributions were led by SEARL (30 points), and INDU (20 points).

Foreign selling continued this week clocking-in at USD 23.0 million compared to a net sell of USD 16.7 million last week.

Selling was witnessed in Cements (USD 8.2 million) and Exploration & Production (USD 6.2 million). On the domestic front, major buying was reported by Insurance Companies (USD 25.2 million) and Banks/DFIs (USD 6.0 million). Average Volumes settled at 264 million shares (up by 9 percent WoW) while average value traded clocked-in at USD 81 million (up by 25 percent WoW).