The Pakistan Stock Exchange (PSX) witnessed a decline on Thursday, with the benchmark KSE-100 index dropping by 326 points. The index closed at 45,082 points, marking a decrease from the previous day’s closing of 45,408 points.
Analysts attribute the market downturn to the rising cases of the Omicron variant of COVID-19 in the country.
The impact of Omicron on investor sentiment became apparent as profit-taking activities dominated the market, particularly in the technology and cement sectors. The negative trend led to the index closing in the red zone, reflecting the concerns of investors over the potential economic repercussions of the Omicron surge.
Analysts at Arif Habib Limited pointed out that the market remained under pressure due to not only the Omicron variant but also the higher trade deficit recorded recently. The year-on-year trade deficit widened significantly by 106.4 percent, reaching $25.478 billion. This surge was primarily driven by a nearly triple increase in imports compared to exports, indicating challenges in the country’s balance of trade.
Throughout the trading day, profit-taking activities were evident, particularly in the technology and cement stocks. This resulted in the market experiencing a downturn, with hefty volumes observed in the 3rd tier stocks. The negative sentiment prevailed across various sectors, with Technology (-116 points), Cement (-78 points), OMC (-27 points), Banks (-22 points), and Textile (-21 points) contributing to the overall decline.
The trading volumes witnessed a decrease from 432.1 million shares to 345.3 million shares, representing a 20.1 percent day-on-day decline. However, the traded value increased by 28.7 percent, reaching US$ 74.8 million as opposed to the previous day’s US$ 58.1 million.
Key stocks contributing significantly to the trading volumes included WTL, TRG, UNITYR3, TELE, and YOUW. The performance of these stocks indicated the prevailing investor activity and sentiment during the trading session.
The market’s reaction to the surge in Omicron cases and the widening trade deficit highlights the interconnectedness of global events and economic indicators with the stock market. Investors are navigating a landscape where pandemic-related uncertainties continue to influence market dynamics.
As Pakistan grapples with the challenges posed by the Omicron variant and the trade deficit, market participants are advised to closely monitor developments, adapt strategies, and remain cautious in their investment decisions. The fluctuating market conditions underscore the importance of a diversified and well-informed approach to investment, especially in times of heightened uncertainty.
The decline in the Pakistan Stock Exchange on January 6, 2022, reflects the impact of rising Omicron cases and a widening trade deficit on investor sentiment. The market’s response emphasizes the need for a vigilant and adaptive approach to navigate the evolving economic landscape.
