Market watch: Stocks extend slide over GIDC verdict

KARACHI:

The stock market extended its slide on Thursday following a court’s ruling on the gas infrastructure development cess (GIDC), which triggered selling and pulled the benchmark index down by 182 points.

In a landmark decision, the Supreme Court dismissed all petitions against the GIDC levy and ruled in favour of the federal government, which would collect Rs420 billion from different companies.

The fertiliser sector bore the brunt of the verdict and endured profit-booking as the sector now owed Rs110 billion in GIDC to the government.

Earlier, trading kicked off on a positive note, however, the bourse succumbed to uncertainty after the verdict and the index fell over 500 points in early hours. After midday, the index staged a modest recovery as late session buying erased most of the losses.

At close, the benchmark KSE-100 index recorded a decrease of 182.44 points, or 0.45%, to settle at 40,290.74 points.

Arif Habib Limited, in its report, stated that the market opened on a positive note at the opening bell with +70 points and volumes of 2.8 million shares.

The index tumbled afterwards as the court ruling on GIDC required industries to pay Rs457 billion on account of GIDC over a period of two years.

“Investors took it as a cue to book profit, which brought the index down by 575 points,” it said. “The index staged a recovery twice afterwards to erase all the losses but profit-booking continued, and it ended the session down by 182 points.”

Exploration and production, oil and gas marketing and technology stocks largely remained unharmed, among which TRG Pakistan and Unity Foods hit their upper circuits.

Fertiliser, cement and banking stocks remained under pressure throughout the day. The vanaspati sector led the volumes with trading in 110 million shares, courtesy Unity Foods, including trading in its right shares.

It was followed by technology firms (81.1 million) and oil and gas marketing companies (72.8 million), the report said.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index traded between a high and low of +91 and -575 points respectively before finally closing at 40,291, down 182 points.

The market remained range bound with cement and exploration and production stocks being major movers. Among these, Maple Leaf Cement (+1.3%), Pioneer Cement (+2.9%), Cherat Cement (+3.2%), Pakistan Oilfields (+0.4%) and Pakistan Petroleum (+0.3%) remained in the green zone.

Oil and Gas Development Company (+0.3%), Pakistan Petroleum (+0.3%) and Pakistan Oilfields (+0.4%) in the exploration and production sector gained ground following optimism in the international crude oil market.

Askari Bank (+7.5%) in the financial sector hit its upper circuit as the bank announced 1HCY20 consolidated earnings per share (EPS) of Rs3.94 versus EPS of Rs2.48 in the same period of previous year with no cash dividend.

Furthermore, Fauji Fertiliser (-6.3%), Engro (-2%), Engro Fertilisers (-2.8%), HBL (-1.1%), Dawood Hercules (-2.5%) and MCB (-1.6%) were the major index movers.

Traded value declined 14% to $115 million and volumes stood at 556 million shares, down 6%.

“Going forward, we expect the market to remain volatile with intra-day corrections and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes declined to 556.1 million shares compared with Wednesday’s tally of 591.2 million. The value of shares traded during the day was Rs19.3 billion.

Shares of 419 companies were traded. At the end of the day, 179 stocks closed higher, 220 declined and 20 remained unchanged.

Unity Foods was the volume leader with 60.3 million shares, gaining Re1 to close at Rs13.9. It was followed by Hascol Petroleum with 50.9 million shares, gaining Rs0.99 to close at Rs16.5 and Unity Foods (R) with 50.6 million shares, gaining Re1 to close at Rs4.12.

Foreign institutional investors were net buyers of Rs336.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.