KSE-100 Monthly Review: Capital Markets depict courage in the face of adversity

May 3, 2020 (MLN): Pakistan’s Capital Markets, after undergoing several ups and downs, saw a positive change in their performance during the month of April, despite the ongoing lockdown and the fears relating to soaring Covid-19 cases in the country.

The KSE-100 index gained approximately 4,880 points during the month and settled at 34,111-level, i.e. 16.69% higher than the close of the previous month.

The credit for the exceptional performance of the benchmark index, especially under the prevailing circumstances, goes to State Bank of Pakistan, as its decision to cut the policy rate by 200 basis points, which is in addition to the 225 points slashed earlier, helped in controlling the impact of Covid-19 on the economy.

The stocks markets got further respite from the measures taken by the government, which allowed several companies and industries across the country to resume their operations, given that all necessary precautions and safety measures were in place.

Besides the abovementioned factors, several other measures and economic developments also drove the stock markets, such as the CPI figures for March which hit a seven-month low, the fall in trade deficit by 26.5% during the nine months ended March 2020, and the grant of $1.4 billion by the International Monetary Fund under the Rapid Financing Instrument.  

The E&P sector led the winning clan during the month, as it made the highest contribution of 1,371 points to the benchmark index. This was followed by 787 points chipped in by the Cement Sector, whose performance was backed by the cut in the discount rate by the State Bank, the announcement of construction package by the Prime Minister, and an increase in cement prices in North Punjab region.  

Other notable performers for the month include Fertilizer Sector and Power Generation & Distribution Sector, with the contribution to the index totaling 668 points and 404 points respectively.

Company-wise, the scrips of OGDC, HUBC, FFC, PPL, and ENGRO generated the maximum returns, as their contribution to the benchmark index amounted to 429, 342, 29, 287 and 285 points respectively.

While the participation by local investors was full of impetus, foreign investors chose not to take any risk by investing in Pakistani markets, therefore, they sold securities worth $68.9 million during the month, with Foreign Corporates doing the bulk of the selling.

On the local front, Mutual Funds did the maximum buying as it picked stocks worth $34.3 million, followed by Insurance Companies and Local Companies, with their purchase of securities amounting to $19.3 million and $12.3 million respectively.

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