Stocks decline over exclusion of blue-chips from MSCI EM index

The capital market declined on Wednesday, as investors resorted to profit-taking amid United Bank and Lucky Cement’s exclusion from the MSCI Global Standard Index Pakistan, dealers said.

Shumaila Badar, head of research at Ismail Iqbal Securities said, “The market was choppy today upon a number of factors. Rout in oil and gas E&P sector following the decline in international crude oil price was one of the major reasons for the benchmark KSE-100 index’s declines.”

The market also declined because of selling pressure in heavyweight stock United Bank, which dipped following the announcement of its exclusion from MSCI's EM index. On the other hand, value hunting in cement stocks supported the index. “We expect the market to be mixed,” she added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.38 percent or 158.23 points to close at 40,994.05 points level. KSE-30 shares index followed suit with a loss of 0.70 percent or 137.75 points to end at 19,571.29 points level.

As many as 378 scrips were active in today’s session, of those 218 moved up, 141 retreated, and 19 remained unchanged. The ready market volumes stood at 255.170 billion shares, as compared with the turnover of 177.169 billion shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed bearish amid profit taking in oil stocks amid major fall in global crude prices.”

Investor concerns for uncertainty over IMF economic bailout talks, outlook for State Bank of Pakistan policy rate, and financial assistance from China and UAE, weak global equities, foreign outflows and concerns for ongoing rupee depreciation played a catalytic role in the bearish close, he added.

The market opened on a negative note, as the announcement from MSCI related to rebalancing and shifting of the companies was announced. It led to declines in several blue chips, trading and investment stocks as market observers feared selling pressure from the foreign investors. Foreign investors since the start of calendar 2018 have already sold shares in excess of $400 million.

Despite MSCI decision to move Lucky Cement to small cap index, it gained Rs13.49, while Maple Cement removed from small cap column was also up Rs1.55. The decision came in line with the expectation. However, Honda Car and United Bank moved down because of their inherent issues.

Crude oil price touched one year low, affecting the listed oil companies which recorded substantial erosion. Mari Petroleum plunged by Rs31 per share, Pakistan Oilfields Rs26, PPL Rs6.58, OGDC Rs4.52, and PSO by Rs1.75 per share.

The highest gainers were Bhanero Textile, up Rs44.99 to close at Rs944.98/share, and Murree Brewery, up Rs35.34 to finish at Rs765.33/share.

Companies that booked highest losses were Colgate Palmolive, down Rs120.80 to close at Rs2,295.25/share, and Pakistan Tobacco, down Rs46.74 to close at Rs2,298.00/share.

Lotte Chemical recorded the highest volumes with a turnover of 24.311 million shares. The scrip gained Rs0.4 to close at Rs19.50/share.

The lowest volumes were witnessed in United Bank, recording a turnover of 9.128 million shares, and losing Rs5.81 to end at Rs131.28/share.