Market watch: Stocks edge down 28 points over FATF decision

Benchmark index decreases 0.08% to settle at 33,870.15

KARACHI: As investors braced for the Financial Action Task Force (FATF) verdict on Friday, the benchmark KSE-100 index inched down 28 points due to speculation over the outcome.

In the afternoon, the FATF decided to keep Pakistan on the grey list after Islamabad could not fully implement the 27-point action plan, providing the country another four months to complete the remaining actions. However, Pakistan staved off the threat of being placed on the FATF blacklist.

Earlier, trading began on a positive note but the index later fell to an intra-day low. At this point, investors began cherry-picking and the first session ended with a gain of 124 points. The second session erased all the gains and the index fell into the negative territory.

At close, the benchmark KSE 100-share Index recorded a decrease of 28.41 points, or 0.08%, to settle at 33,870.15.

JS Global analyst Danish Ladhani said equities closed on a negative note with the benchmark KSE-100 index shedding 28 points and closing at 33,870, down 0.1%.

"Pakistan has until February to improve its counter-terror financing operations in line with an internationally agreed action plan or face action against it," he said. "Moreover, Jamiat Ulema-e-Islam-Fazl chief Maulana Fazlur Rehman has turned down a government's offer for negotiations and declared that the party's decision on the October 31 Azadi march on Islamabad was irreversible."

The financial sector was the major laggard during the trading session where HBL (-1.8%) and UBL (-0.5%) lost ground. Bank Alfalah (-0.7%) reported 9MCY19 consolidated earnings per share (EPS) of Rs5.48 vs Rs4.98 in the same period of last year with no cash payout.

Exploration and production stocks experienced mixed investor sentiment as Oil and Gas Development Company (-0.9%) remained in the red while Pakistan Oilfields (+0.7%) was positive. International oil prices dropped amid rising crude stockpiles.

Investors' interest was seen in the fertiliser sector where Engro (+2.9%) and Fauji Fertiliser (+0.7%) gained ground. Moreover, Engro Fertilisers (+4.4%) reported 9MCY19 consolidated EPS of Rs7.87 vs Rs9.17 in the corresponding period of previous year with dividend per share of Rs6.

Traded value rose 30% day-on-day to $31 million while traded volumes declined 16% to 115 million shares.

Major contribution to the total market volume came from Lotte Chemical (-2.9%), Engro Fertilisers (+4.4%), Pakistan Oilfields (+0.7%) and TRG Pakistan (-0.6%).

"Moving ahead, we expect the market to remain choppy due to developments on the political front," the analyst said.

Arif Habib Limited, in its report, said the market ended the first session of Friday up by 124 points with trading in 45 million shares but the second session pushed the index down by 28.4 points adding 70 million shares to the trading volume.

Trading activity was relatively brisk in the second session as compared to the first. The second session braced for the impact of FATF decision on Pakistan, which gave a hint of stern action in case the unresolved action points were not implemented. Pakistan would stay in the grey list till February 2020.

Overall, the market oscillated between +198 points and -231 points, where the second half showed more negativity.

Engro Fertilisers announced its financial results and declared more-than-anticipated dividend, clearing the way for the stock price to hit the upper circuit, the report added.

Overall, trading volumes decreased to 115.2 million shares compared with Thursday's tally of 138 million. The value of shares traded during the day was Rs4.9 billion.

Shares of 367 companies were traded. At the end of the day, 136 stocks closed higher, 207 declined and 24 remained unchanged.

Lotte Chemical was the volume leader with 18.4 million shares, losing Rs0.48 to close at Rs16.13. It was followed by Engro Fertilisers with 7.9 million shares, gaining Rs3.07 to close at Rs72.14 and The Bank of Punjab with 7.8 million shares, gaining Rs0.08 to close at Rs9.79.

Foreign institutional investors were net buyers of Rs37.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.