Stocks dip as earnings season nears its end
A sign of the Pakistan Stock Exchange is seen on its building in Karachi, Pakistan January 11, 2016. PHOTO: REUTERS
As the earnings season neared its end, the Pakistan Stock Exchange (PSX) witnessed a downturn of 230 points as security concerns sparked some selling pressure.
The trading day began on a strong note, with the KSE-100 index reaching its intra-day high of 79,160.39 points. However, the momentum died down soon, leading to gradual fluctuations throughout the session.
Although the energy sector outperformed due to robust financial results and a payout announcement by Hub Power (Hubco), coupled with rising global crude oil prices, uncertainty weighed on investor interest. Concerns over the International Monetary Fund (IMF) approval of taxes, restructuring of dues of independent power producers (IPPs) and power subsidies contributed to the downward trend.
In final trading hours, the market fell below the 79,000 mark and reached its intra-day low of 78,553.86 points. It ended trading near the day's low with modest losses.
"Stocks closed lower amid consolidation near the close of earnings season and security concerns over the Chehlum procession," said Ahsan Mehanti, MD of Arif Habib Corp, adding that the energy sector outperformed after strong financial results and payout announcement by Hubco as well as surging global crude oil prices.
"Uncertainty over the IMF's approval of taxes, IPPs' dues restructuring and power subsidies played the role of catalysts in bearish close at the PSX." At the end of trading, the benchmark KSE-100 index posted a drop of 230.37 points, or 0.29%, and settled at 78,571.06.
Topline Securities, in its report, noted that investors opted to trim their stock positions near the 79,000 level, which compelled the market to settle below 79k post-intra-day high of 79,160, a gain of 359 points during the day.
"A relatively lacklustre momentum was witnessed during business hours," it said.
Power, pharma and fertiliser sectors contributed positively where Hub Power, GlaxoSmithKline, Highnoon Laboratories, Dawood Hercules and The Searle Company added 336 points.
On the other hand, Habib Bank, United Bank and Abbott Laboratories cumulatively lost 203 points due to some selling in them, Topline added.
Arif Habib Limited (AHL), in its review, said that the PSX saw a "weak start with the KSE-100 remaining below 79,000."
Some 35 stocks rose while 63 fell with Hub Power (+5.55%), GlaxoSmithKline (+10%) and Highnoon Laboratories (+4.07%) being the biggest contributors to the index gains while Habib Bank (-3.73%), United Bank (-1.4%) and Abbott Laboratories (-9.53%) were the largest downside contributors, AHL commented.
JS Global analyst Mohammed Waqar Iqbal said that Monday marked the beginning of rollover week, with investors adopting a cautious stance in the absence of significant triggers.
"Looking ahead, consolidation is likely to continue where any positive developments from the upcoming IMF executive board meeting could enhance market sentiment. Therefore, any market dips may present buying opportunities, particularly in technology, fertiliser, and oil and gas sectors," the analyst added.
Overall trading volumes decreased to 512.3 million shares compared with Friday's tally of 682.4 million. The value of shares traded during the day was Rs18.9 billion.
Shares of 433 companies were traded. Of these, 150 stocks closed higher, 242 fell and 41 remained unchanged.
Symmetry Group was the volume leader with trading in 59.4 million shares, losing Rs0.04 to close at Rs7.69. It was followed by Kohinoor Spinning Mills with 50.6 million shares, losing Rs0.4 to close at Rs10.52 and WorldCall Telecom with 24.4 million shares, losing Rs0.02 to close at Rs1.28.
Foreign investors were net sellers of shares worth Rs335.03 million, according to the NCCPL.