Stocks retreat as investors lock in profits on weak LSM data

Stocks closed lower on Wednesday as investors opted for profit-taking amid dismal Large Scale Manufacturing (LSM) data, traders said.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index fell by 150.34 points or 0.21 percent to close at 70,333.32 points. The highest index of the day remained at 70,725.50 points while the lowest level was recorded at 70,037.28 points. The KSE-30 index decreased by 81.97 points or 0.35 percent to 23,120.59 points.

“Stocks closed lower as investors weigh dismal LSM data on negative growth 0.51 percent year-on-year for July-Feb’23, IMF higher inflation projections at 24.8 percent and subdued economic growth at 2 percent for FY24,” said analyst Ahsan Mehanti at Arif Habib Corp.

"The global oil price hike impacting growth outlook, weaker rupee and ongoing geo-political tensions played a catalytic role in the bearish close."

Traded shares decreased by 106 million shares to 442.096 million shares from 548.418 million shares. The trading value dropped to Rs16.034 billion from Rs21.032 billion. Market capital narrowed to Rs9.795 trillion against Rs9.812 trillion. Of 359 companies active in the session, 148 closed in green, 196 in red and 15 remained unchanged.

Ali Najib, an analyst at Topline Securities, said equities kicked off the day on a positive note as the benchmark index made an intraday high at 70,726 level, +242 points, in the morning. "However, at the day’s high, profit-taking was initiated," Najib said. "Resultantly, the benchmark index could not stay in the green zone and called the day at 70,333 levels."

The aforementioned market behaviour can be accredited to investors’ approach to book profit in energy and fertilizer sector stocks, he added.

Consequently, the day’s negative contributors were EFERT, OGDC, ENGRO, FFC and PPL as they lost 196 points. On the other hand, BAFL, UBL and BAHL saw some buying interest as they added 99 points.

The highest increase was recorded in Nestle Pakistan Limited shares, which rose by Rs75 to Rs7,600 per share, followed by Ismail Industries Limited, which increased by Rs72.86 to Rs1,072.86 per share. A significant decline was noted in Rafhan Maize Products Company Limited, which fell by Rs31 to Rs8,299 per share, followed by Philip Morris (Pakistan) Limited, which closed lower by Rs15.90 to Rs679 per share.

Brokerage Arif Habib Ltd said the KSE-100 index encountered difficulties in surpassing levels above 70,600, indicating a struggle in the near-term.

"A sustained move below the crucial 70k mark could trigger a short-term correction in the market," the brokerage added.

Despite the challenges, analysts emphasize that holding above the 70,000 level will help maintain upside targets for the market. Investors are closely monitoring market dynamics and corporate earnings reports for further insights into the market direction in the coming days.

Pak Refinery remained the volume leader with 39.117 million shares which closed higher by Rs1.82 to Rs28.42 per share. Fauji Cement followed it with 27.951 million shares, which closed higher by 77 paisas to Rs20.34 per share.

Other significant turnover stocks included Kohinoor Spining, Cnergyico PK, Pak Int. Bulk, WorldCall Telecom, PIAC (A), Dewan Motors, Unity Foods Ltd and Faysal Bank.

In Future Market, 307 companies recorded trading, of which 120 increased, 181 decreased and 6 remained unchanged.