Market watch: Stocks extend losses into third day

KARACHI:

Stocks remained on the downtrend for the third straight day on Friday as investors continued to book profit in an overbought market amid economic uncertainty.

News about Standard & Poor’s (S&P) rating agency anticipating a high fiscal deficit and debt-to-gross domestic product ratio for Pakistan in FY21 impacted investors’ sentiment. However, S&P affirmed Pakistan’s ‘B-‘ long-term and ‘B’ short-term sovereign ratings while maintaining a stable long-term outlook.

Moreover, news about privatisation of Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) dented investor interest, pushing exploration and production stocks into the negative zone.

Alongside, the weakening oil prices in the international market coupled with rupee volatility supported the bearish momentum.

Earlier, trading began on a negative note and the KSE-100 index fell steadily throughout the day. Selling pressure was largely evident as all index-heavy sectors recorded losses.

At close, the benchmark KSE-100 index recorded a decrease of 246.96 points, or 0.62%, to settle at 39,621.59 points.

Arif Habib Limited, in its report, stated that the market took a battering because of profit-booking as well as news of approval of the privatisation of OGDC and PPL.

Exploration and production stocks saw significant selling pressure, besides cement, oil and gas marketing, pharma and fertiliser sectors.

The banking sector, which borne selling pressure throughout the session, saw recovery by the end, which helped the index to recoup losses, it said.

The technology sector led the volumes with trading in 74.5 million shares, followed by cement firms (64.9 million) and power companies (31.8 million).

Individually, stocks that contributed positively to the index included NBP (+14 points), HBL (+12 points), Engro (+12 points), Frieslandcampina Engro (+10 points) and Bank Alfalah (+7 points).

Stocks that contributed negatively included PPL (-52 points), OGDC (-40 points), Hubco (-37 points), PSO (-23 points) and Dawood Hercules (-14 points).

JS Global analyst Danish Ladhani said the benchmark KSE-100 index remained in the negative zone, hitting a low of -628 points. It closed at 39,621, down 247 points. “The market remained lacklustre,” he added.

Mixed sentiment was seen in the exploration and production sector where OGDC (-2.3%) and PPL (-3.4%) were in the red zone whereas Pakistan Oilfields (+0.1%) closed in the green as concerns over the global economic recovery from Covid-19 grew, Ladhani stated.

“PPL (-3.4%), Hubco (-2.1%), OGDC (-2.3%), PSO (-2.5%) and Lucky Cement (-0.7%) were the major laggards.”

Frieslandcampina Engro Pakistan (+7.5%) announced 1HCY20 earnings per share of Rs0.38 versus loss per share of Rs0.31 in the same period of last year with no cash dividend.

Moreover, Lotte Chemical (-2.4%) in the chemical sector announced 1HCY20 earnings per share of Rs0.07 versus Rs2.01 in the same period of previous year with no payout.

Traded value stood at $81 million, down 3% and volumes came in at 400 million shares, up 1%.

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

Overall, trading volumes rose to 400.5 million shares compared with Thursday’s tally of 394.6 million. The value of shares traded during the day was Rs13.7 billion.

Shares of 390 companies were traded. At the end of the day, 135 stocks closed higher, 237 declined and 18 remained unchanged.

WorldCall Telecom was the volume leader with 24 million shares, losing Rs0.06 to close at Rs1.21. It was followed by Azgard Nine with 21.8 million shares, gaining Rs0.21 to close at Rs17.24 and TPL Corp with 19.6 million shares, losing Rs0.24 to close at Rs7.15.

Foreign institutional investors were net sellers of Rs37.5 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.