Market watch: Price correction pulls KSE-100 down

Benchmark index decreases 335.49 points to settle at 39,788.73

KARACHI: The bullish rally came to an end on Tuesday as the stock market succumbed to price correction and closed trading in the red zone.

Following a brief open in the positive, the market dropped nearly 400 points with selling pressure evident in bank, auto, exploration and production, steel and cement sectors.

The resistance to the rally came on the back of dwindling investors' confidence as the benchmark index crossed the 40,000 psychological barrier after 10 months. Investors opted to trade with caution and resorted to profit-booking.

At close, the benchmark KSE 100-share Index recorded a decrease of 335.49 points, or 0.84%, to settle at 39,788.73.

Topline Securities, in its report, stated that after four consecutive sessions in which the index gained, the KSE-100 lost 335 points to close at 39,789.

The market started the day on a positive note as it hit an intra-day high of 40,444 points after which the tide turned as investors decided to book profits, it added.

"Investor reaction made sense as the index had gained 6% in the last four sessions while at the same time closed above 40,000 points."

JS Global analyst Danish Ladhani said equities closed on a negative note with the benchmark KSE-100 index shedding 335 points.

"We expect value buying in the market to prevail at lower levels. The index traded in the positive territory in the initial hours on the back of news that Moody's Investors Service had upgraded Pakistan's outlook from 'negative' to 'stable', while reaffirming the country's B3 rating," he said.

Cement, fertiliser and financial stocks were the major laggards among which Lucky Cement (-2.8%), DG Khan Cement (-3.6%), Engro (-2.4%), UBL (-1.8%) and Bank AL Habib (-1.9%) contributed to the negative close.

"Moving ahead, we expect the market to trade sideways ahead of the release of CPI numbers," Ladhani added.

Overall, trading volumes decreased to 448.9 million shares compared with Monday's tally of 557.4 million. The value of shares traded during the day was Rs14.4 billion.

Shares of 392 companies were traded. At the end of the day, 154 stocks closed higher, 229 declined and nine remained unchanged.

K-Electric was the volume leader with 42.8 million shares, gaining Rs0.10 to close at Rs4.69. It was followed by TRG Pakistan with 25.3 million shares, gaining Rs0.28 to close at Rs24.58 and The Bank of Punjab with 19.1 million shares, losing Rs0.44 to close at Rs11.96.

Foreign institutional investors were net buyers of Rs40.3 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.