KARACHI: The outgoing week was nightmarish for the stock market which saw the KSE-100 index sink by 5,393 points, representing the heaviest point-wise fall in the history.

It also translated into the weekly plunge of 15pc, recording the largest in terms of percentage since the global financial crisis of December 2008. It finally closed at 30,667.

Pakistani market also became a casualty to the fast spreading coronavirus with confirmed cases rising by the day. Panic-stricken investors stampeded almost throughout the week to dump stocks and seek shelter of safer bets in fixed income securities.

Investors also were keeping track of the steps taken by the authorities to avoid social contact among individuals. They wondered if the lockdown of government and other offices in major cities would reflect upon the industrial and commercial economy.

While investors were worried over the possibility of global slowdown, the blessing in disguise for the country’s economy was the plunge in price in international oil. On the economic side, the current account deficit (CAD) shrank by 61pc month-on-month in February.

The week started on a negative note extending the earlier week’s heavy plunge. Major developments were Monetary Policy Committee announcement of a 75bps cut in key rate. Local investors were discouraged by the State Bank of Pakistan response which decreed minimal cut in its benchmark policy rate by a meagre 75bps against expectations between 100-300bps.

Foreigners sold stocks worth $20 million compared to a net sale of $23m the previous week. Their major outflow was witnessed in commercial banks at $6m and cement $5m. On the local front, buying was reported by insurance companies at $23.5m, followed by individuals $19.5m. Average daily volume fell 10pc to 239m shares and mean traded value declined 33pc to $55m.

Sector-wise contribution to the downside was led by commercial banks, plunging by 1,484 points, cement 729 points, oil and gas exploration companies 537 points, power generation and distribution 424 points and fertiliser 408 points.

Among scrips, major losses were seen in Habib Bank, lower by 372 points, United Bank 366 points, Lucky Cement 361 points, Hub Power 334 points and MCB 264 points. Top gainers were Pakistan Tobacco, up nine points and Ibrahim Fibre 2 points.

Going forward, experts were fearful of a market under pressure going ahead as the rapidly spreading coronavirus and news regarding lockdown of major cities (Karachi and Lahore) would keep investors in bearish frame of mind.

The outflow of foreign investment from both equity and debt market was thought to keep up the pressure on local currency. On the positive side, the country could be at a great advantage in the face of multi-decade crash in international crude prices.

Investors may notice improvement on macroeconomic front, with the CAD shrinking for 8MFY20.

Published in Dawn, March 22nd, 2020