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December 10, 2019

Market ends down as investors lock on profits in overbought scrips


December 10, 2019

The capital market on Monday witnessed profit-taking in overbought scrips, as the index had geared up sharply in the last couple of sessions, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said “Stocks closed lower on institutional profit taking in over bought scrips.”

Weak earnings outlook in auto, steel and cement scrips amid expected subdued economic growth in FY20-FY22, higher CPI inflation in November 2019 and concerns over ongoing political noise played a catalytic role in the bearish close, Mehanti added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.71 percent or 289.44 points to close at 40,442.81 points level. KSE-30 shares index followed suit with a low of 0.79 percent or 147.71 points to end at 18,450.97 points level.

Of 388 active scrips, 147 moved up, 223 retreated, and 18 remained unchanged. The ready market volumes stood at 320,078 million shares, as compared with the turnover of 416.921 million shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali said, “Market suffered downward correction as expected because the index faces resistance whenever it reaches near 41,000 points level; equities move down.”

The overall sentiment remained intact following the course of downward correction spell. The index would rise as key economic numbers, such as the shrinking trade deficit, surplus current account, appreciating rupee, and consistent increase in foreign exchange reserves, have all improved since the start of the fiscal year, Salman added.

Auto and cement shares were down owing to selling pressure where share prices were down in the range of Rs2 to Rs21.18/share.

Moreover, oil and exploration stocks gained momentum on back of increase in global crude oil prices. Crude oil price was up following OPEC decision to cut daily supply by 0.5 million barrels per day.

Furthermore, Saudi Arabia and other countries would also cut the supplies by 0.4 million barrels per day, cumulating to around 0.9 million barrels per day.

A leading analyst said, “Market was bound to go down because of continuous sixth week upward trend. Last week too, the market witnessed improvement of 1,400 points with good volumes.”

The market might react in coming sessions to recover sharply following Asian Development Bank assurance to disburse 1.3 billion dollars to Pakistan for its budgetary support and to reduce circular debt.

Arif Habib Limited in their analysis said, “The benchmark index went up by 184pts in the morning and largely traded in a narrow range for a good part of the session.”

Near the close of the session, the market saw profit booking, which brought the index down by 417pts closing the session at negative 289pts, the brokerage house added.

The highest gainers were Nestle Pakistan, up Rs362.25 close at Rs7,607.25/share, and Unilever Foods, up Rs100.00 to finish at Rs7,350.00/share.

Companies that booked highest losses were Bata Pakistan, down Rs22.33 to close at Rs2,056.65/share, and Indus Motor Company, down Rs21.18 to close at Rs1,205.00/share.

Unity Foods Limited recorded the highest volumes with a turnover of 26.850 billion shares. The scrip lost Re0.67 end at Rs13.29/share.

The lowest volumes were witnessed in Pakistan International Bulk, recording a turnover of 7.516 million shares, whereas the scrip lost Re0.07 to end at Rs11.54/share.