Stocks extend losses on profit-taking

KSE-100 index drops 150.34 points, settles at 70,333.32

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday continued its gradual movement towards south as investors opted for profit-booking after the market rose to its intra-day high above 70,700 points.

As some investors were scared to invest at high levels, the market began the day on a negative note and the KSE-100 index dipped to the intra-day low of 70,037.28 points in the very first hour.

Weak large-scale manufacturing (LSM) industries’ data that showed a negative growth of 0.51% for July-February 2023-24 dented the investors’ buying interest.

Market sentiment received a hit over fears of a sticky high inflation, as projected by the International Monetary Fund (IMF).

Global oil price surge forced investors to adopt a cautious approach. Furthermore, the rupee continued its downward trajectory over likely escalation in the Middle Eastern conflict, which pulled the currency down to almost four-week low against the US dollar in the inter-bank market.

Following a partial recovery, profit-booking emerged, which dragged the index further down at the end of trading, but it managed to stay above the 70,000 mark.

“Stocks closed lower as investors weighed the dismal LSM data that showed a negative growth of 0.51% for Jul-Feb FY24 and the IMF’s higher inflation projection of 24.8% for FY24,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Global oil price hike impacting the growth outlook, weaker rupee and the ongoing geopolitical tensions played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded a decline of 150.34 points, or 0.21%, and settled at 70,333.32.

Topline Securities, in its report, declared Wednesday as “a day of consolidation”.

Pakistan equities kicked off the day on a positive note, however, at the day’s high, profit-taking was initiated, it said. Resultantly, the benchmark index could not stay in the green zone.

The market behaviour could be attributed to the investors’ approach to book profit in stocks of energy and fertiliser sectors. Major negative contributors were Engro Fertilisers, Oil and Gas Development Company Limited (OGDCL), Engro Corporation, Fauji Fertiliser Company and Pakistan Petroleum, which lost a total of 196 points. On the other hand, Bank Alfalah, United Bank and Bank AL Habib saw some buying interest as they added 99 points, Topline added.

In its review, Arif Habib Limited (AHL) said “near term the KSE-100 struggles with levels above 70,600 and a sustained move below 70,000 can see a short-term correction set in”.

United Bank announced 1QCY24 earnings per share (EPS) of Rs13.05, up 12% year-on-year and 19% quarter-on-quarter (4QCY23 EPS at Rs11). It also declared dividend per share of Rs11. The bank’s earnings were fuelled by a substantial quarter-on-quarter rise in non-interest income, AHL added.

JS Global analyst Muhammad Shuja Qureshi said that the market commenced trading on a negative note along with thin volumes. There was notable investor interest in banking, cement and refinery sectors.

“Going forward, we recommend investors to consider a buy-on-dips strategy, especially focusing on banking, exploration and production, and technology sectors,” the analyst added.

Overall trading volumes decreased to 442.1 million shares against Tuesday’s tally of 548.4 million. The value of shares traded during the day was Rs16.03 billion.

Shares of 359 companies were traded. Of these, 148 stocks closed higher, 196 dropped and 15 remained unchanged.

Pakistan Refinery was the volume leader with trading in 39.1 million shares, gaining Rs1.28 to close at Rs28.42. It was followed by Fauji Cement with 27.95 million shares, gaining Rs0.77 to close at Rs20.34 and Kohinoor Spinning with 26.5 million shares, gaining Rs0.1 to close at Rs4.98. Foreign investors were net sellers of shares worth Rs113.5 million, according to the NCCPL.

Published in The Express Tribune, April 18^th, 2024.

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