Market Watch: KSE-100 loses 787 points over budget pessimism

Benchmark index sheds 2.27% to settle at 33,824.51

KARACHI: Bearish activity dominated trading at Pakistan Stock Exchange on Monday as investors expressed their disappointment over the FY21 budget, which caused turmoil and dragged the KSE-100 index down by 787 points.

Investors’ dismay over the budget was reflected in the sell-off at the bourse as they had expected a handful of tax incentives coupled with more relief from the “corona budget”.

Major sectors of the economy were of the unanimous view that the government had announced no major relief in the budget. Reduction in federal excise duty for the cement sector, as part of the budget, failed to entice investors and none of the stocks in the sector moved up.

Also fuelling bearish sentiment was a plunge in global stock markets on the back of fears of a second wave of Covid-19 infections as many countries, including China, once again reported high number of cases.

Earlier, trading began with a dip and the overall pessimism restrained the market from posting gains. Investors resorted to profit-booking over quashed hopes for a business-friendly budget.

Selling pressure gained momentum as the trading session progressed, dragging the index down to below 34,000 points.

At close, the benchmark KSE-100 index recorded a decrease of 786.72 points, or 2.27%, to settle at 33,824.51 points.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index nosedived, shedding 787 points and closing at 33,824.

“The market came under pressure on the back of disappointment that followed the federal budget for FY21,” he said. “There was positive news in the budget for cement, steel and pharmaceutical sectors whereas negative news for textile and automobile sectors.”

MCB (-3.4%), Oil and Gas Development Company (-3.1%), Lucky Cement (-3.3%), UBL (-3.7%), Engro (-2%), Pakistan Petroleum (-2.8%), Hubco (-2.7%) and HBL (-1.8%) were the index movers.

Traded value stood at $50 million, up 31% and volumes came in at 263 million shares, up 48%.

“Going forward, we expect the market to remain negative and recommend investors to buy on dips,” the analyst said.

Arif Habib Limited, in its report, stated that the market did not respond well to the government’s budget announcement. The benchmark index overall lost 796 points and closed down by 787 points.

The budget largely disappointed investors, who had expected major tax cuts and incentives in the budget which the government itself termed a “corona budget”.

Selling pressure was observed across the board from banks to oil and cement companies without showing interest in a reduction in duties on the import of raw material for various sectors.

The highest trading volume was recorded in the vanaspati sector with 45.3 million shares, followed by cement companies (38.7 million) and chemical firms (23.9 million).

Among individual stocks, Unity Foods topped the index with trading in 45.3 million shares, followed by Power Cement (10.9 million) and Azgard Nine (10.3 million), the report said.

Overall, trading volumes increased to 262.8 million shares compared with Friday’s tally of 177.9 million. The value of shares traded during the day was Rs8.3 billion.

Shares of 355 companies were traded. At the end of the day, 84 stocks closed higher, 250 declined and 21 remained unchanged.

Unity Foods was the volume leader with 45.4 million shares, gaining Rs0.29 to close at Rs12.96. It was followed by Power Cement with 10.97 million shares, losing Rs0.07 to close at Rs6.25 and Azgard Nine with 10.3 million shares, gaining Rs0.95 to close at Rs16.5.

Foreign institutional investors were net buyers of Rs180.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.