Market watch: Inflation hike fuels market’s fall

Benchmark KSE-100 index sheds 114.39 points to settle at 47,686.18

KARACHI:

The Pakistan Stock Exchange (PSX) ended the week on a bearish note on Friday with the benchmark KSE-100 index shedding over 100 points as the market reacted to developments on the economic front.

Soaring inflation, which accelerated to nearly 9%, significantly higher than the official target of 6.5% in fiscal year 2020-21, fuelled selling pressure across the board at the bourse.

However, stability came on the back of some encouraging economic data. Adviser to Prime Minister on Commerce Abdul Razak Dawood on Thursday stated that Pakistan achieved the highest-ever exports of goods valuing at $25.3 billion in fiscal year 2020-21.

Meanwhile, according to data released on Friday, the cement sector posted a sales growth of 12.73% in June 2021 compared to June 2020, but it failed to entice market participants.

In the morning, the market opened upwards and rose sharply in earlier trading. However, the trend could not be sustained. Second session selling pressure further dragged the market into the negative territory.

At close, the benchmark KSE-100 index recorded a decrease of 114.39 points, or 0.24%, to settle at 47,686.18.

A report of Arif Habib Limited stated that the market traded range bound with the KSE-100 index oscillating between -163 points and +279 points.

“Profit-booking was witnessed again after an uptick was observed in the index in the last two sessions, particularly in cement, oil and gas marketing companies, refineries and technology sectors,” it said.

The report added that despite stable oil prices in the international market and an overnight jump, the listed exploration and production sector remained bearish with selling pressure in Oil and Gas Development Company and Pakistan Petroleum.

Sectors contributing to the performance included power (-24 points), banks (-22 points), exploration and production (-18 points), cement (-17 points) and investment banks (-15 points).

Individually, stocks that contributed positively to the index included Lucky Cement (+21 points), AGP Limited (+19 points), TRG Pakistan (+13 points), Kohat Cement (+8 points) and Fauji Fertiliser (+8 points).

Stocks that contributed negatively were Hubco (-24 points), Pakistan Petroleum (-14 points), Cherat Cement (-13 points), Hascol Petroleum (-12 points) and MCB (-12 points).

JS Global analyst Muhammad Mubashir said that the market opened positive and touched intra-day high of +279 points after which profit-taking dragged the index down to close with a loss of 114 points.

“Pressure was mainly witnessed in cement and refinery sectors,” he said.

Traded volume stood at 563 million shares where Hascol Petroleum (-9.3%), WorldCall Telecom (-1%), Kohinoor Spinning Mills (+11.1%), Pace (+0.1%) and Ghani Global Holdings (-1.7%) were the highest contributors.

Mubashir added that investor interest was witnessed in Sazgar Engineering Works (+6.6%) on the back of material information that a Greenfield investment status had been awarded by the Ministry of Industries and Production.

On the news front, the minister of energy came up with assurances that power generation was expected to improve by Monday as re-gasified liquefied natural gas (RLNG) supply had been restored.

“We expect volatility in the market and recommend investors to buy on dips in cement and textile sectors,” the analyst said.

Overall trading volumes dropped to 563.8 million shares compared with Thursday’s tally of 760 million. The value of shares traded during the day was Rs16.3 billion.

Shares of 414 companies were traded. At the end of the day, 175 stocks closed higher, 224 declined and 15 remained unchanged.

Hascol Petroleum was the volume leader with 49.5 million shares, losing Rs0.85 to close at Rs8.26. It was followed by WorldCall Telecom with 43.8 million shares, losing Rs0.04 to close at Rs4.06 and Kohinoor Spinning with 28.9 million shares, gaining Rs0.62 to close at Rs6.19.

Foreign institutional investors were net sellers of Rs32 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.