Index bows to selling pressure in overbought shares

Stocks on Wednesday bowed to selling pressure in overbought scrips after trading in a near narrow range as forces of adjustment are currently at work in an otherwise sentimentally strong market that was in dire need of triggers to break this plateau, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index slipped 0.33 percent (133.18 points), settling at 40,531.42 points by the close. On the other hand, with a loss of 0.54 percent (100.32 points) KSE-30 ended the day at 18,429.53 points.

Of as many as 387 scrips active today, 144 moved up, 223 slipped, and 20 remained unchanged. On a day-on-day basis, the turnover was up at 305.027 million shares, compared to 254.622 million yesterday.

Ahsan Mehanti from Arif Habib Corporation, said stocks closed under pressure in overbought scrips on concerns over dismal car sales plunging by 44 percent during July-November FY19, and likely subdued economic growth through FY20.

“Surging CPI (Consumer Price Index) based inflation, concerns over ongoing political noise, weak earnings outlook in cement sector and fertilisers weighed,” Mehanti added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said the market had been on downhill course because of the continuous increase in share prices and due to its current overboughtness it was undergoing adjustment.

“It appears the adjustment would be over soon, because resistance at the level of 41,000 points was arriving from all the fronts; however, all the macroeconomic indicators are strong and some new positive news required to cheer the mood of the investors,” Ahmad said.

A dealer was of the view the market as expected, owing to lack of any positive triggers slipped, but declines were minimal, showing inherent sentiment were quite strong and some positive developments on economic fronts could lead to fresh gains.

The index during the last couple of weeks have strengthened by over 10,000 points from a low of 28,000 odd points in August, encouraging financial institutions, banks, and high net-worth individuals to sell their holdings to book profits.

A leading analyst said with the yearend approaching, few of the mutual funds and foreign fund houses had been active sellers to record profits in their books to balance out their positions against the first quarter losses suffered in the start of the fiscal year.

Arif Habib Limited in their daily market analysis said the index was bound in a range from +247 points to -214pts during the session and closed at the low ebb.

“Volumes improved over the day and crossed 300 million-mark again. Selling pressure was evident almost across the board, but mostly in oil & gas chain and banks,” the brokerage said.

The highest gainers were Unilever Foods, up Rs150.01 close at Rs7,500.01/share, and Colgate Palmolive, up Rs100 to finish at Rs2,200/share.

Companies that booked highest losses were Bhanero Textile, down Rs39.01 to close at Rs761.00/share, and Nestle Pakistan, down Rs37.61 to close at Rs7950.00/share.

Unity Foods Limited recorded the highest volumes with 44.521 million shares and gained Rs0.61 to end at Rs14.66/share, while Lotte Chemical with a turnover of 6.383 million shares, posted the lowest turnover, losing Rs0.3 to end at Rs14.82/share.