Market watch: Bears make comeback; KSE-100 sheds 49 points

KARACHI:

The Pakistan Stock Exchange (PSX) on Monday succumbed to selling pressure after three trading sessions in the positive and the benchmark KSE-100 index shed nearly 50 points amid a lack of positive triggers and an uncertain political situation.

During the trading session, remarks by State Bank of Pakistan (SBP) Governor Dr Reza Baqir in an interview that Pakistan was in talks with the International Monetary Fund (IMF) to put its fiscal support programme back on track caused optimism and the index surpassed the 46,000-point mark within the first hour of trading.

Furthermore, the central bank last week announced encouraging data of remittances, which stood above $2 billion for the sixth consecutive month in December.

However, all these encouraging developments failed to entice investors to keep up the uptrend and the market could not sustain the 46,000 mark.

Political instability in the wake of continued standoff between the opposition and the government, coupled with news of increase in power tariff by Rs1.06 per unit on account of fuel cost adjustment for October and November 2020, impacted the investment climate.

Earlier, taking cue from last week, stock trading began on a bullish note as strong investor sentiment lifted the market nearly 455 points in the first few hours. However, the buying momentum could not be sustained and a selling spree, emerging towards midday, weighed on the bourse, erasing the gains and dragging the index downwards.

At close, the benchmark KSE-100 index recorded a decrease of 48.92 points, or 0.11%, to settle at 45,605.42 points.

Arif Habib Limited, in its report, stated that the KSE-100 index crossed another milestone of 46,000 points by advancing 455 points in intra-day trading. However, profit-booking eroded all the gains and the index declined 125 points during the session.

International crude oil prices remained range bound that caused lacklustre activity in exploration and production sector stocks. Similarly, profit-booking in banks and oil and gas marketing companies contributed to the attrition.

“Fertiliser sector stocks inched up on expectation of increase in urea prices, however, profit-booking kept the rise in check,” it added. “During the session, the SBP governor hinted at a successful resumption of the IMF programme that supported positive investor sentiment.”

Sectors contributing to the performance included banks (-49 points), technology (-24 points), textile (-20 points), exploration and production (-14 points), power (+50 points), pharma (+45 points) and chemical (+14 points).

Individually, stocks that contributed positively to the index included Searle (+44 points), Kot Addu Power Company (+31 points), Colgate-Palmolive (+24 points), Hubco (+18 points) and Bank AL Habib (+11 points).

Stocks that contributed negatively were UBL (-26 points), Meezan Bank (-22 points), Pakistan Petroleum (-17 points), TRG Pakistan (-15 points) and MCB (-13 points).

JS Global analyst Maaz Mulla said the benchmark KSE-100 index closed in the red at 45,605, down 49 points, after touching intraday high and low of +455 and -125 points respectively.

“Profit-taking in second half of the session came from institutions, which compelled individuals to square up their positions,” he added.

Volume leaders were Silkbank (+11.9%), Hum Network (+15.6%), Byco Petroleum (-4.9%), The Bank of Punjab (+2.7%), Pakistan Refinery (+0.2%), Kot Addu Power Company (+6.9%) and BankIslami Pakistan (+5.8%), cumulatively contributing 273 million shares.

Power sector stocks continued their upward march on the back of news that the federal government and independent power producers (IPPs) had agreed to sign master agreements, which would be annexed with the power purchase agreements (PPAs) instead of making massive amendments to the PPAs.

As a result, Pakgen Power (+7.5%), Kot Addu Power Company (+6.9%), Nishat Chunian Power (+3.7%), Lalpir Power (+4.5%) and Hubco (+0.8%) closed in the green.

“Going forward, we recommend investors to avail themselves of any downside as a buying opportunity in the cement and banking sectors,” the analyst said.

Overall, trading volumes decreased to 588 million shares compared with Friday’s tally of 696.4 million. The value of shares traded during the day was Rs17.7 billion.

Shares of 415 companies were traded. At the end of the day, 173 stocks closed higher, 227 declined and 15 remained unchanged.

Silkbank was the volume leader with 69.9 million shares, gaining Rs0.13 to close at Rs1.22. It was followed by Hum Network with 64.1 million shares, gaining Re1 to close at Rs7.43 and Byco Petroleum with 61.5 million shares, losing Rs0.51 to close at Rs9.90.

Foreign institutional investors were net buyers of Rs50.43 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.