Market watch: Stocks fall 420 points as selling pressure persists

Benchmark index decreases 0.97% to settle at 42,747.62

KARACHI: Stocks kicked off the week on a bearish note as the index fell below the 43,000-point mark as political and economic developments kept investors cautious.

After a brief open in the positive zone, the market plunged soon after the first hour of trading as selling pressure persisted. Developments including an early-called meeting of the Financial Action Task Force, delay in increase in gas prices by the Economic Coordination Committee (ECC) and political uncertainty prompted investors to remain on the sidelines.

"The ECC decided to reduce GIDC (Gas Infrastructure Development Cess) with the aim of reducing urea prices. Resultantly, Engro Fertilisers hit its lower circuit whereas Fauji Fertiliser Company and Fauji Fertiliser Bin Qasim recorded positive price performance," said AHL Research in its report.

At close, the benchmark KSE 100-share Index recorded a decrease of 420.14 points, or 0.97%, to settle at 42,747.62.

JS Global analyst Maaz Mulla said another weak trading session was witnessed at the bourse where the KSE-100 index closed at 42,748.

"Such bearish sentiment can be attributed to the news that a Pakistani delegation has gone to Beijing for a highly important three-day face-to-face talks with the global money laundering watchdog - the Financial Action Task Force (FATF) - which will start on January 21."

Major movers of the market were Engro (-3.3%), Engro Fertilisers (-5.5%), UBL (-2%), HBL (-1.3%), Dawood Hercules (-2.8%), Pakistan Petroleum Limited (-1.1%) and Lucky Cement (-1.2%), which drove the market into the negative zone.

Furthermore, as per news reports, the ECC approved a reduction in the GIDC for the fertiliser sector in a bid to push down urea prices by Rs400 per bag, the analyst said.

Fauji Fertiliser Company (+3.5%) and Fauji Fertiliser Bin Qasim (+5.5%) remained positive while on the flipside Engro Fertilisers (-5.5%) and Fatima Fertiliser (-1.5%) closed in the red zone.

"Moving forward, we except profit-taking to continue, therefore, we recommend investors to book profit on strength," he added.

Overall, trading volumes declined to 173.9 million shares compared with Friday's tally of 211.4 million. The value of shares traded during the day was Rs7.1 billion.

Shares of 353 companies were traded. At the end of the day, 70 stocks closed higher, 267 declined and 16 remained unchanged.

Engro Fertilisers was the volume leader with 15.3 million shares, losing Rs4.13 to close at Rs71.17. It was followed by TRG Pakistan with 11.9 million shares, losing Rs1.25 to close at Rs27.42 and The Bank of Punjab with 11.7 million shares, losing Rs0.20 to close at Rs13.70.

Foreign institutional investors were net sellers of Rs236.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.