Market watch: Stocks start week on bearish note

KSE-100 index dips 195 points to settle at 33,916.64

KARACHI: The benchmark KSE-100 index of the Pakistan Stock Exchange on Monday lost ground due to instability in international crude oil prices.

Stocks fell from the moment trading began, reacting to the impact of Covid-19 pandemic on the national economy and domestic markets.

Moreover, anticipation of rate cut in the upcoming monetary policy announcement weighed on sentiment that prevented investors from taking fresh positions.

At close, the benchmark KSE-100 index recorded a decrease of 195 points, or 0.57%, to settle at 33,916.64.

Arif Habib Limited, in its report, stated that the market witnessed some profit-booking on the back of developing situation on the international front and oil prices, which came down after posting significant gains last week.

“Exploration and production and oil marketing companies recorded considerable trading volume and largely maintained a higher average than the last trading session,” it said.

Meanwhile, banking-sector stocks posted losses amid low volumes. “The prospect of rate cut kept banks under selling pressure, which caused the index to decline by 402 points during the session,” the report added.

The cement sector led the volumes with trading in 43.5 million shares, followed by oil and gas marketing companies (21.7 million) and technology firms (21.7 million).

Stocks that contributed positively to the index included Colgate-Palmolive (+21 points), Engro Fertilisers (+14 points), PSO (+12 points), Pioneer Cement (+12 points) and TRG Pakistan (+9 points).

Meanwhile, stocks that contributed negatively were Hubco (-76 points), Engro (-29 points), Mari Petroleum (-26 points), Lucky Cement (-25 points) and HBL (-21 points).

JS Global analyst Maaz Mulla said a weak trading session was witnessed at the PSX with the market touching intra-day low of -402 points and closing at 33,916.

“Such bearish sentiment at the bourse can be attributed to the ongoing impact of coronavirus on local markets,” he stated.

Furthermore, Mulla pointed out, “on the news front, Pakistan is expected to once again come under scrutiny in the Morgan Stanley semi-annual index review in May 2020 for a potential downgrade from emerging markets to frontier markets.”

He said the cement sector came under pressure on the back of news that the government was reported to have taken notice of the immediate price hike of Rs50 per bag by north-zone manufacturers up to the activation of government’s incentive package for the construction sector.

DG Khan Cement (-3%), Maple Leaf Cement (-2.8%), Cherat Cement (-3.4%), Kohat Cement (-3.7%) and Lucky Cement (-1.9%) were major losers of the sector.

“Going forward, we expect the market to remain under pressure and recommend investors to sell on strength amidst the result season,” the analyst said.

Overall, trading volumes decreased to 216.6 million shares compared with Thursday’s tally of 292.1 million. The value of shares traded during the day was Rs9.4 billion.

Shares of 353 companies were traded. At the end of the day, 155 stocks closed higher, 178 declined and 20 remained unchanged.

Maple Leaf was the volume leader with 18.3 million shares, losing Rs0.80 to close at Rs27.38. It was followed by Hascol Petroleum with 13.6 million shares, losing Rs0.24 to close at Rs14.94 and Unity Foods with 12.2 million shares, gaining Rs0.36 to close at Rs11.89.

Foreign institutional investors were net sellers of Rs1.04 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.