Market watch: Profit-taking pulls KSE-100 down

Benchmark index falls 468.64 points to settle at 41,381.83

KARACHI:

Investor sentiment turned bearish at the Pakistan Stock Exchange on Tuesday and it dragged the KSE-100 index down by 469 points as market participants took cue from a slump in global equity markets.

Since the start of the week, world stock markets had been struggling amid surging Covid-19 cases and looming threat of lockdown in different countries. The oil market fared no better as both major global benchmarks fell close to 2% on Monday.

Despite a host of encouraging financial results announced during the day, selling pressure built up at the local bourse and persisted for most part of the day. Investors’ trading strategy was also influenced by the upcoming long weekend.

Index-heavy automobile, cement, oil and banking sectors experienced a hit from profit-taking and closed with significant losses.

Earlier, trading began with a slight uptick, however, keeping in view the decline in global markets, investors resorted to profit-booking, which triggered a selling spree in the initial hours. The KSE-100’s downward march deepened further as the session progressed and losses swelled.

At close, the benchmark KSE-100 index recorded a decrease of 468.64 points, or 1.12%, to settle at 41,381.83 points.

Arif Habib Limited, in its report, stated that the market could only add 72 points earlier in the session, however, post-announcement of PSO financial results, the market discounted the earnings growth and investors resorted to profit-booking that pulled the price significantly down from the day’s high.

A similar activity was observed in the cement sector that saw recent highs on Monday and Tuesday.

Besides the deteriorating law and order situation and rise in Covid-19 cases, investors took cue from the overnight decline in international stock and commodity markets, which registered average attrition of 2.5%.

Regional markets followed suit that led investors to resort to profit-booking, the report said.

JS Global analyst Danish Ladhani said the benchmark KSE-100 index closed on a bearish note, shedding 469 points after touching high and low of +71 and -523 points. It finally closed at 41,382.

“Volatility prevailed in the market amid profit-taking, mainly in financial and cement sectors, due to the rollover week,” he said.

Among major companies, MCB (+0.9%), PSO (-3.3%) and Pak Suzuki Motor (-0.6%) announced their results. MCB reported consolidated 9MCY20 earnings per share (EPS) of Rs19.35 versus EPS of Rs13.74 in the same period of last year.

Moreover, PSO reported consolidated 1QFY21 EPS of Rs11.07 against EPS of Rs7.45 in the corresponding period of last year. The company reported its earnings far below market consensus, hence, it closed near the lower circuit.

“This week, the market can continue to remain edgy, hence, we recommend investors to book short-term gains on the higher side,” the analyst said.

Overall, trading volumes fell to 481 million shares compared with Monday’s tally of 487.2 million. The value of shares traded during the day was Rs18.4 billion.

Shares of 407 companies were traded. At the end of the day, 101 stocks closed higher, 295 declined and 11 remained unchanged.

Unity Foods was the volume leader with 77.2 million shares, gaining Rs1.04 to close at Rs22.71. It was followed by Power Cement with 33 million shares, losing Rs0.09 to close at Rs10.25 and Fauji Fertiliser Bin Qasim with 31.3 million shares, gaining Rs0.97 to close at Rs23.54.

Foreign institutional investors were net sellers of Rs952.9 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.