Market watch: KSE-100 falls below 40,000 points amid sell-off

Benchmark index dips 285.56 points to settle at 39,868.55

KARACHI:

In a turbulent trading session on Thursday, the KSE-100 index lost 286 points and dropped below the 40,000-point mark in the wake of a host of negative triggers, which sapped investors’ spirit.

The release of disappointing foreign direct investment (FDI) data during the session, which showed a 35% month-on-month decline in July, wreaked havoc on the market and investors resorted to divesting their stockholdings.

Dismal financial results in the banking sector dragged the sector down while the drop in global oil prices triggered sell-off in oil sector stocks. Both oil sectors mostly closed in the red.

A rise in Pakistan Investment Bond (PIB) yields in Wednesday’s auction dashed hopes for a further monetary easing and extended the selling spree.

A bear-run in regional markets, which registered a record decline, exacerbated the selling pressure in the domestic market. During the session, the MSCI’s broadest index of Asia-Pacific shares outside Japan posted its biggest daily decline in five weeks.

Index-heavy automobile, fertiliser and cement sectors experienced modest selling, pulling the index down.

Earlier, trading began with a spike, however, the bourse failed to sustain the uptrend owing to weak investor sentiment. Pessimistic news flow sparked panic selling and market participants offloaded stocks.

A few attempts were made to recoup the losses, however, they proved futile. The downtrend deepened further in final hours, which extended the losses.

At close, the benchmark KSE-100 index recorded a decrease of 285.56 points, or 0.71%, to settle at 39,868.55 points.

Arif Habib Limited, in its report, stated that the market opened on a positive note with +29 points, however, it could not carry the momentum of previous sessions and posted a total loss of 372 points during the session.

Selling activity was observed in fertiliser, cement, refinery and oil and gas marketing sectors and it intensified towards the end of the session, especially after the announcement of MCB and Faysal Bank financial results.

Faysal Bank hit its lower circuit after the announcement. Similarly, MCB lost ground after the announcement but it traded above its lower circuit.

Regional markets showed bearish activity at the beginning of the session. Wednesday’s PIB auction also recorded a rise in yield on short-term papers.

The technology sector topped the volumes with trading in 84.5 million shares, followed by power companies (40.2 million) and banks (36.7 million), the report said.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index hit a high and low of +95 and -373 points respectively before finally closing at 39,868, down 286 points. “The market remained lacklustre with some sideways trading,” he said.

Profit-taking was witnessed in the second half with Engro (-1.2%), Hubco (-1.7%), Lucky Cement (-1.6%), Oil and Gas Development Company (-0.5%), MCB (-4.2%) and Pakistan Petroleum (-1%) being the major laggards.

Mixed sentiment was seen in the financial sector where HBL (+0.9%) and UBL (+0.3%) closed in the green zone whereas MCB (-4.2%) remained in the red zone as the bank announced 1HCY20 consolidated earnings per share (EPS) of Rs11.33 vs EPS of Rs8.79 in the same period of last year.

Moreover, Allied Bank (+4.2%) announced 1HCY20 consolidated EPS of Rs7.40 vs Rs5.45 in the same period of last year. Faysal Bank (-7.3%) announced 1HCY20 consolidated EPS of Rs2.50 vs Rs1.98 in the corresponding period of previous year.

Furthermore, TPL (+15%) and its subsidiary TPL Pakistan (+12.5%) touched the upper circuit as the company announced that the board of directors had approved the sale of the company’s flagship project to Bank AL Habib.

ICI (+0.6%) announced its FY20 consolidated EPS of Rs27.37 vs Rs27.34 in the previous year with a cash payout of Rs5 per share. ICI also disseminated material information that the company had approved the capacity expansion of light soda ash production at its Khewra plant.

Among refineries, Pakistan Refinery (-3%) reported FY20 loss per share (LPS) of Rs17.74 vs LPS of Rs13.68 in the previous year.

“Going forward, we expect the market to trade sideways ahead of the rollover week with intraday corrections and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes fell to 394.6 million shares compared with Wednesday’s tally of 427.2 million. The value of shares traded during the day was Rs14.2 billion.

Shares of 401 companies were traded. At the end of the day, 145 stocks closed higher, 238 declined and 18 remained unchanged.

TRG Pakistan was the volume leader with 30.4 million shares, gaining Rs1.33 to close at Rs51.20. It was followed by PTCL with 21 million shares, gaining Rs0.27 to close at Rs9.46 and Unity Foods with 20.1 million shares, gaining Rs0.36 to close at Rs14.35.

Foreign institutional investors were net sellers of Rs450.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.