Stocks take a breather; weighed down by profit-taking

Stocks took a breather on Tuesday, after profit-booking in overbought equities interrupted a four-session rally that added over a whopping 6 percent to the benchmark index, mainly on improving economic stability prospects, dealers said.

Pakistan stock exchange’s (PSX) KSE-100 shares index shed 0.84 percent or 335.49 points to close at 39,788.73 points, whereas KSE-30 lost 1 percent or 183.66 points to close at 18,204.21 points.

Topline Securities in its daily market review said,” Index started on a positive note as it hit an intra-day high of 40,444, following which the tide turned owing to profit-booking”.

“Investor reaction made sense as the index had gained 6 percent in the last four sessions while at the same time closed above 40,000 points level after 9 months,” the brokerage added.

As many as 392 stocks were active today, of which 154 advanced, 229 declined, and nine remained unchanged. Investor participation in terms of volume shrank 20 percent to 448.87 million shares, compared to 557.394 million on Monday.

Ahsan Mehanti at Arif Habib Corp said stocks closed lower on pressure in overbought scrips amid global equity selloff. “Investor concerns over expected subdued economic growth in FY20 and uncertainty over central bank policy rate announcements amid likely higher CPI (Consumer Price Index) inflation in November 2019 weighed on the stocks,” Mehanti added.

Nestle Pakistan, up Rs324.5 to close at Rs6,814.50/share, and Bata Pakistan up Rs97.46 to close at Rs2,048.47/share, were among the top gainers. The top losers were: Rafhan Maize, down Rs100 to close at Rs6,900/share, and Colgate Palmolive, down Rs90 to end at Rs1,890/share.

Danish Ladhani at JS Global Capital said the index traded in the positive trajectory in the initial hours drawing strength from Moody’s Investors Services’ positive review of Pakistan’s economy, but closed lower in the end.

“We see value-buying in the market to prevail at lower levels, while moving ahead, the market is expected to move sideways ahead of CPI numbers” Ladhani said. Cements, fertilisers and financials were the major laggards, where Lucky Cement, down 2.8 percent, DG Khan Cement, down 3.6 percent, Engro, down 2.4 percent, United Bank Linited, down 1.8 percent, and Bank Al Habib, down 1.9 percent, contributed towards the negative close.

An analyst at Arif Habib Limited said market finally saw some correction when the index slid by 400 points. “Selling pressure was mainly observed in banks; however, autos, exploration and production, steel and cement sector also had their share of it,” the analyst said.

Refinery sector performed well with Attock Refinery and National Refinery hitting upper circuits, he said. “The main idea behind selling appeared profit-booking, where the index crossed the psychological barrier of 40,000 points,” said the analyst.

K-Electric posted a turnover of 42.8 million shares to become the volume leader of the day, gaining 10 paisas to close at Rs4.69/share. TRG Pakistan was second with 25.29 million shares, gaining 28 paisas to close at Rs24.58/share. Though, with a traded volume of 19.14 million shares, Bank of Punjab was the third highest volume-maker, but it lost 44 paisas to finish at Rs11.96/share.