Market watch: Stocks gain slightly as budget anxiety restricts rally

Benchmark index increases 92.3 points to settle at 34,659.85

KARACHI: The stock market endured a lacklustre session and rose slightly on Tuesday because of uncertainty ahead of announcement of the federal budget 2019-20 and following release of Economic Survey, which painted a gloomy picture of the economy.

Investors adopted a wait and see approach before clarity emerged regarding the federal budget.

According to Arif Habib Limited's analyst Ahsan Mehanti, stocks showed signs of recovery amid higher trading in a pre-budget rally after reports of Rs7.02-trillion federal budget outlay in fiscal year 2019-20.

Cement, banking and fertiliser sectors outperformed on expectations of higher development budget.

Earlier, the market opened under pressure and recorded a decline of 300 points after which recovery emerged in anticipation of creation of the State Enterprise Fund, stated Arif Habib Limited in a report.

However, the anxiety over the FY20 budget, the political noise after the arrest of ex-president Asif Ali Zardari and opposition leader Hamza Shehbaz kept investors on their toes. The arrest of MQM's founder Altaf Hussain in London added to the anxiety and the index remained under selling pressure by the session's end.

Major volumes were seen in the cement sector (18.7 million) followed by power sector (11.8 million) and technology sector (10.5 million), it added.

At the end of trading, the benchmark KSE 100-share Index recorded an increase of 92.3 points, or 0.27%, to settle at 34,659.85.

JS Global analyst Maaz Mulla said equities remained in the positive territory with the KSE-100 index gaining 92 points, closing at 34,660.

"The bourse kicked off trading in the red zone, hitting a low of -300 points but then recovered to touch a high of +231 points," he said. "Moreover, the federal budget 2019-20 was due to be presented in parliament later in the day with ominous signs of levy of higher taxation."

Fertiliser and energy stocks pushed the index upwards among which Fauji Fertiliser (+5%) closed at its upper limit and was the major mover in the fertiliser sector.

Pakistan Petroleum (+1.1%) and Oil and Gas Development Company (+2.5%) gained in the exploration and production sector. Cement and financial stocks were the major laggards.

Lucky Cement (-1.8%) closed negative in the cement sector whereas Bank AL Habib (-2.3%), MCB Bank (-1.7%) and HBL (-0.7%) were the losers in the banking sector.

Average daily traded value stood at $29 million, up 23% and volumes stood at 117 million, up 27%.

"We expect the market to remain choppy and volatile ahead as we recommend investors to stay cautious as the budget FY20 was being presented," the analyst concluded.

Overall, trading volumes increased to 116.9 million shares compared with Monday's tally of 91.7 million. The value of shares traded during the day was Rs4.3 billion.

Shares of 314 companies were traded. At the end of the day, 177 stocks closed higher, 117 declined and 20 remained unchanged.

K-Electric was the volume leader with 9 million shares, gaining Rs0.07 to close at Rs4.34. It was followed by Unity Foods with 7.3 million shares, gaining Rs0.52 to close at Rs10.35 and TRG Pakistan with 7.2 million shares, gaining Rs0.69 to close at Rs15.01.

Foreign institutional investors were net sellers of Rs48.7 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.