Market watch: PSX sheds 80 points on return from Eid break

KARACHI:

The Pakistan Stock Exchange (PSX) snapped the winning streak on Friday after posting gains for five consecutive sessions, succumbing to selling pressure and closing down by 80 points as investors resorted to profit-booking on poor economic data.

The approaching rollover week and the monetary policy announcement scheduled for July 27 (Tuesday) played a prominent role in the bearish close of the market.

Unimpressive trade data, with the trade deficit widening to $1.6 billion in June 2021, adversely impacted the positive momentum, pulling the benchmark KSE-100 index down following five consecutive sessions of advance.

Moreover, continuous depreciation of Pakistani rupee against the US dollar on the back of a soaring import bill coupled with rising number of Covid-19 cases and increase in restrictions to contain the spread of the virus shattered investor confidence.

The index traded in a narrow range in first half of the session after which it marched downwards and ended the day with a loss.

At close, the benchmark KSE-100 index recorded a decrease of 80.19 points, or 0.17%, to settle at 47,793.07.

Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the stock market was dull due to a short week and long holidays.

“Rollover of positions in the coming week and volatility in Pakistani rupee were some of the reasons behind the negative close of stock market,” he added.

Predicting the performance in the coming week, the research head said, “I think with the improvement in economic indicators from next month, the market should resume its rally.”

Arif Habib Limited, in its report, stated that the market traded in a narrow range, oscillating between +73 points and -187 points.

“Further fall of Pakistani rupee in the inter-bank market prompted investors to adopt a cautious approach towards cement, steel, fertiliser and refinery stocks, which have exposure to the declining rupee-dollar parity with impact on the cost of production,” it said.

On the other hand, the weakening currency had a positive bearing on technology, textile, exploration and production sectors, which fared well.

Oil and gas marketing companies saw further appreciation in stock prices of Sui Northern Gas Pipelines and Sui Southern Gas Company, whereas the banking sector had HBL and UBL as positive contributors to the KSE-100 index.

Sectors contributing to the performance included cement (-25 points), refinery (-17 points), textile (-15 points), oil and gas marketing companies (+11 points) and power (+5 points).

Individually, stocks that contributed positively to the index included Sui Northern Gas Pipelines (+24 points), Systems Limited (+16 points), Hubco (+12 points), Lucky Cement (+10 points) and Fauji Fertiliser (+7 points).

Stocks that contributed negatively were Engro (-12 points), Maple Leaf Cement (-10 points), Pakistan State Oil (-10 points), TRG Pakistan (-9 points) and PSX (-9 points).

JS Global analyst Muhammad Mubashir said that the stock market touched a high of 47,946 in the initial hours, but soon came under pressure as investors chose to book profit over rising coronavirus cases.

The market touched a low of 47,686 points before closing the session at 47,793, down 80 points.

Investor participation remained dull throughout the day. A total of 314 million shares changed hands where Byco Petroleum (-3%), Dandot Cement (R) (-38%), Pace (+4.8%), Sui Northern Gas Pipelines (+6.7%) and WorldCall Telecom (+1.1%) contributed a cumulative 39% to the aggregate volume.

“On the economic front, the current account recorded a deficit of $1.85 billion during FY21 while textile exports grew 22.9% during the year,” he said.

“Going forward, we expect range-bound activity to continue in the coming sessions due to rollover week and recommend investors to see any downside as an opportunity to buy in cement and textile sectors,” the analyst said.

Overall trading volumes dropped to 314.2 million shares compared with Monday’s tally of 321 million. The value of shares traded during the day was Rs11.1 billion.

Shares of 417 companies were traded. At the end of the day, 160 stocks closed higher, 237 declined and 20 remained unchanged.

Byco Petroleum was the volume leader with 34.1 million shares, losing Rs0.32 to close at Rs10.45. It was followed by Dandot Cement (R) with 24 million shares, losing Rs0.28 to close at Rs0.45 and Pace (Pakistan) with 22.6 million shares, gaining Rs0.37 to close at Rs8.14.

Foreign institutional investors were net sellers of Rs2.1 billion worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.