Market watch: Bourse starts week on disappointing note

Benchmark KSE-100 index drops 588.61 points to settle at 40,209.82

KARACHI:

Bears were back in control of the stock market on Monday as a four-day winning streak ended and the bourse came under pressure in the wake of Asia-Pacific Group’s (APG) stance on Pakistan.

The APG on Money Laundering kept Pakistan on its Enhanced Follow-up list while keeping in view technical recommendations from the Financial Action Task Force (FATF).

Despite upbeat remittances data announced during the trading session, which showed inflows touching $2.3 billion in September 2020 and remaining above $2 billion for the fourth consecutive month, bulls failed to maintain their grip on the stock market.

The market’s reversal was also attributed to political uncertainty coupled with surging coronavirus cases in Pakistan, which kept investors on the sidelines.

The benchmark KSE-100 index traded in a narrow range and continued to oscillate between red and green zones. Although overall sentiment was positive, investors still opted to book profit and switch positions.

Earlier, trading began on a positive note as investors took cue from last week’s bullish close but the momentum was short-lived as a lack of positive triggers coupled with speculation about economic troubles erased gains.

At close, the benchmark KSE-100 index recorded a decrease of 588.61 points, or 1.44%, to settle at 40,209.82 points.

Arif Habib Limited, in its report, stated that the market braced for the impact of APG decision that kept Pakistan on the Enhanced Follow-up list, which was primarily an evaluation based on Pakistan’s performance as of February 2020.

“The plenary session of FATF is scheduled to be held from October 21-23,” the report said.

The index added 249 points during the day, on top of 2,230 points gained since hitting the recent low. Overall, the bourse felt heavy as retail investors considered it the best time to book profit and close positions, the report said.

Sectors that contributed to the performance included exploration and production (-98 points), cement (-85 points), banks (-72 points), oil and gas marketing (-50 points) and power (-48 points).

Individually, stocks that contributed positively to the index included Azgard Nine (+5 points), Bank AL Habib (+4 points), FrieslandCampina Engro Pakistan (+4 points), Millat Tractors (+4 points) and AGP Limited (+4 points).

Stocks that contributed negatively were Oil and Gas Development Company (-45 points), HBL (-38 points), Hubco (-38 points), TRG Pakistan (-35 points) and Pakistan Petroleum (-32 points).

JS Global analyst Danish Ladhani said the KSE-100 index closed at 40,210 (down 589 points) after touching intraday high and low of +249 and -649 points respectively.

“The market traded sideways with low volumes in first half of the session but it came under pressure in the second half on the back of rumours that FATF had delineated no relief for Pakistan,” he stated.

“On the political front, Prime Minister Imran Khan accepted Lt Gen (Retd) Asim Saleem Bajwa’s resignation from the additional portfolio of Special Assistant to Prime Minister on Information and Broadcasting,” he added.

The exploration and production sector remained under pressure where Pakistan Petroleum (-2.4%), Oil and Gas Development Company (-2.9%) and Pakistan Oilfields (-0.7%) closed in the red. Oil prices inched down in the international market after a Norwegian strike ended and US production resumed as Hurricane Delta weakened.

Traded value increased slightly to $79 million, up 8% and volumes came in at 378 million shares, up 5%.

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

Overall, trading volumes rose to 377.6 million shares compared with Friday’s tally of 358.8 million. The value of shares traded during the day was Rs12.9 billion.

Shares of 406 companies were traded. At the end of the day, 74 stocks closed higher, 314 declined and 18 remained unchanged.

Power Cement was the volume leader with 50.6 million shares, losing Rs0.50 to close at Rs9.02. It was followed by Hascol Petroleum with 41.8 million shares, losing Rs1.06 to close at Rs15.63 and TRG Pakistan with 23.4 million shares, losing Rs3.37 to close at Rs45.64.

Foreign institutional investors were net sellers of Rs82.1 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.