Market watch: Stocks fall as budget, political uncertainty looms

Benchmark KSE-100 index loses 459.57 points

KARACHI: Pakistan equities tumbled on the first trading day of the week by nearly 1.3% as institutions reportedly sold index names ahead of the budget announcement.

At close on Monday, the Pakistan Stock Exchange’s benchmark KSE 100-share Index recorded a fall of 1.25% or 459.57 points to end at 36,234.69.



Elixir Securities, in its report, said the day kicked off lower with Fauji Cement (-5%) hitting the lower limit at pre-open as investors turned nervous with the offer of over 35 million shares after an accident at the company’s plant over the weekend. The incident sparked speculation that production would be halted for months.

“Lucky Cement (-2.5%) also fell as investors possibly reduced exposure to add Maple Leaf Cement (+3.2%) and Dera Ghazi Khan Cement (+0.9%) that are beneficiaries in the short run given proximity to the (Fauji) plant.

“Financial and oil stocks also moved with market direction and lost ground as the index tested support at 36,200 while retail investors were left struggling given losses in small and mid-caps,” the report said.

“We do not see any major respite in Fauji Cement as support will likely kick in only after clarity on the extent of damage and pace of recovery while the wider market may test 36,000 before index-heavy oil and financial stocks see institutional buying from value hunters,” commented Elixir Securities analyst Faisal Bilwani.

Meanwhile, JS Global analyst Ahmed Saeed Khan was of the view that political uncertainty and concerns over execution of key projects under the China-Pakistan Economic Corridor (CPEC) kept the mood of participants bearish at the bourse.

“Negativity could be attributed to a decline in the banking and oil sector. The oil sector retreated on the back of slipping global crude prices after Canada’s output returned to the market.

“Hascol (+5%) continued its rally on the back of news that the oil marketing company will establish a joint-venture company with its partner Vitol Dubai to build and operate an oil storage capacity of 200,000 tons at Port Qasim.”



Profit-taking was recorded in the banking sector where biggest laggards of the day were MCB Bank (-3.44%) and Habib Bank Limited (-2.8%).

“Fauji Cement hit limit down (-5%) on news that a raw meal silo structure, which contained about 25,000 tons of raw material, collapsed damaging its production line-2, which will potentially render it non-operational for approximately six months,” Khan said.

“Major peers of Fauji Cement gained on the expectation that they would capitalise on any potential production loss due to the accident.”

Trade volumes increased to 205 million shares compared with Friday’s tally of 200 million.

Shares of 380 companies were traded. At the end of the day, 99 stocks closed higher, 263 declined while 18 remained unchanged. The value of shares traded during the day was Rs9.2 billion.

K-Electric was the volume leader with 22.7 million shares, losing Rs0.17 to finish at Rs7.60. It was followed by Kohinoor Spinning with 15.7 million shares, gaining Rs0.68 to finish at Rs6.28 and TRG Pakistan with 12.6 million shares, losing Rs1.80 to close at Rs35.81.

Foreign institutional investors were net buyers of Rs518 million during the trading session, according to data maintained by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, May 31^st, 2016.

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