Market watch: Bourse turns bearish, falls 326 points

Benchmark index decreases 0.93% to settle at 34,570.62

KARACHI: After posting gains for four consecutive sessions, the KSE-100 index snapped the winning streak on Thursday as approval of a loan package by the International Monetary Fund (IMF) failed to entice investors, resulting in a 326-point fall in the market.

During the session, the investors resorted to profit-booking amid pressure on stocks across the board, said M Faizan of Next Capital in a report. After an initial spike, the KSE-100 index maintained its downward trajectory, finishing the day with heavy sell-off, he added.

Aba Ali Habib Securities stated in its report that the long awaited IMF funding facility failed to impress investors as concerns of domestic businesses weighed down investor sentiments.

The business community had voiced serious concern over the hike in taxes and tariffs introduced in the Finance Bill 2019, which brought numerous sectors of the economy to a standstill, it said.

All index-heavy sectors fell into the negative territory with cement and exploration and production sectors closing entirely in the red.

At the end of trading, the benchmark KSE 100-share Index recorded a decrease of 325.93 points, or 0.93%, to settle at 34,570.62.

Arif Habib Limited, in its report, stated that the slogan of "buy the rumour, sell the news" proved true again as approval of the IMF loan package pushed the index up by 400 points earlier in the day but soon selling pressure emerged, leading to a plunge of 430 points by the end of the session.

"Cement, steel and fertiliser stocks contributed to the decline whereas key stocks of banking and power sectors remained positive," it said.

Similar to Wednesday's trading activity, the cement and chemical sectors led the volumes table with the former recording trading in 22 million shares and the latter in 14 million shares.

Among individual stocks, K-Electric topped the chart with trading in 9 million shares, followed by TRG Pakistan with 8 million shares.

JS Global analyst Maaz Mulla said the KSE-100 index blew hot and cold, hitting an intra-day high of +383 points and low of -430 points.

Major losers were Lucky Cement (-3%), Pakistan Petroleum (-1.3%), PSO (-3.1%) and Oil and Gas Development Company (-1.8%).

Volumes decreased by 14% day-on-day to 112 million shares compared to 130 million shares in the previous trading session.

"On the news front, the IMF executive board approved a $6-billion bailout package for Pakistan, of which $1 billion would be released immediately," he said. "Moreover, the tax amnesty scheme has fetched more than Rs70 billion so far through the declaration of over 140,000 properties till the expiry of deadline."

The cement sector dragged the index down where DG Khan Cement (-4.8%), Maple Leaf Cement (-3.8%), Pioneer Cement (-4.3%) and Lucky Cement (-3%) lost ground.

Gas utilities came under pressure in the last half hour. Sui Southern Gas Company (-4.3%) and Sui Northern Gas Pipelines (-4.1%) closed near their respective lower locks.

"Going forward, we expect the market to exhibit volatility in coming sessions due to ambiguity in the political environment," the analyst added.

Overall, trading volumes decreased to 111.9 million shares compared with Wednesday's tally of 130.4 million. The value of shares traded during the day was Rs4.4 billion.

Shares of 318 companies were traded. At the end of the day, 61 stocks closed higher, 241 declined and 16 remained unchanged.

K-Electric was the volume leader with 8.98 million shares, losing Rs0.05 to close at Rs4.29. It was followed by TRG Pakistan with 8.24 million shares, losing Rs0.71 to close at Rs17.16 and Maple Leaf Cement with 7.6 million shares, losing Rs0.96 to close at Rs24.37.

Foreign institutional investors were net buyers of Rs471.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.