Market watch: KSE-100 dips 479 points as govt moves to sell stakes in SOEs

Benchmark index falls 1.56% to settle at 30,158.96

KARACHI: The stock market on Thursday took a U-turn as the KSE-100 index once again plunged into the negative territory due to the government's move to divest its stake in Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL).

In the morning, trading began on a negative note, but the KSE-100 managed to erase losses and register gains by midday. The planned divestment of government's stake in the two state-owned enterprises (SOEs) dented investor confidence and sparked selling, which dragged the market deep into the red zone.

At close, the benchmark KSE 100-share Index recorded a decrease of 478.75 points, or 1.56%, to settle at 30,158.96 points.

Arif Habib Limited, in its report, stated that it was quite an eventful day at the bourse with proposed divestment of government's stake in OGDC and PPL, resolution of the gas infrastructure development cess (GIDC) issue for the fertiliser sector and result announcement by Hascol Petroleum.

"Reiteration of the government's intent to divest shares in OGDC (7%) and PPL (10%), with a host of other transactions in financial and power sectors, caused selling pressure in both OGDC and PPL, which by the end of the session resulted in PPL hitting its lower circuit," it said. "Similarly, OGDC also saw activity near the lower circuit."

For a good part of the trading session, the benchmark index oscillated between +171 points and -250 points.

The resolution of the GIDC issue was considered mainly positive for the fertiliser sector. As a result, Fauji Fertiliser and Fauji Fertiliser Bin Qasim hit their upper price ceilings but saw selling pressure before the close of market.

Hascol Petroleum announced its financial results that prompted investors to sell the stock at its lower circuit.

Selling pressure mounted by the end of session, which resulted in the market recording a total loss of 527 points with the benchmark index closing down by 479 points, the report added.

Topline Securities, in its report, stated that the KSE-100 index came under pressure after two flat sessions and closed at 30,159.

"The exploration and production sector was the top laggard, erasing 155 points from the index, after the formal advertisement of the Privatisation Commission pertaining to divestment of government's stake in OGDC (7%) and PPL (10%)," it said.

On the potential increase in stock float, investor sentiment turned negative and both stocks lost value in the range of 4-4.5%.

Furthermore, it added, the government issued an ordinance, waiving 50% of outstanding GIDC for the fertiliser sector, which was expected to have a one-off positive impact on earnings of the entire sector.

Fauji Fertiliser and Engro Fertilisers saw increase in the range of 2-5% in their stock prices.

Top laggards of the KSE-100 index were OGDC (70 points), PPL (65 points) and HBL (40 points). On the other hand, Fauji Fertiliser (67 points) and Engro Fertilisers (13 points) were the top contributors.

Overall, trading volumes decreased to 118.6 million shares compared with Wednesday's tally of 149 million. The value of shares traded during the day was Rs4.4 billion.

Shares of 338 companies were traded. At the end of the day, 74 stocks closed higher, 250 declined and 14 remained unchanged.

Lotte Chemical was the volume leader with 15.13 million shares, losing Rs0.13 to close at Rs15.93. It was followed by K-Electric with 5.13 million shares, losing Rs0.16 to close at Rs3.22 and WorldCall Telecom with 4.81 million shares, gaining Rs0.04 to close at Rs0.76.

Foreign institutional investors were net sellers of Rs156.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.