Stocks flatline as falling crude weakens oil, gas chain

Stocks on Monday flatlined after moving both ways as an easing crude oil took a toll on hydrocarbon sector, while most of the investors stayed at the sidelines of the overbought market for the lack of triggers, dealers said.

The KSE-100 shares index at the Pakistan Stock Exchange (PSX) gained 0.03 percent or 11.62 points to close at 43,218.67 points, while KSE-30 was up 0.02 percent or 4.31 points to end at 20,032.51 points.

Ahsan Mehanti from Arif Habib Corporations said, “Stocks closes higher led by oil, banking, and textile scrips on strong valuations”.

“Investor concerns over surging fiscal deficit, subdued economic growth and higher inflation invited mid-session pressure.” Fitch affirmations on stable outlook and B- long-term rating, bull-run in global equities and upbeat $2.09 billion record remittances data in December 2019 helped the market close on a positive note, Mehanti added. Of 364 active scrips, 195 were up, 157 down, and 12 ended unchanged. The volumes reached 366.135 million shares, compared to 400.084 million in the previous session.

Salman Ahmad, head of institutional sales at Abba Ali Habib Securities, said “The market was flat owing to overbought situation owing to tremendous gains made in the last two sessions of the preceding week”.

“Moreover, there was a political hiccup for the government following an MQM (Muttahida Qaumi Movement) minister’s resignation. The government is trying to patch up with the political party through holding talks with them.”

The future trends would depend upon the interest rate announcement and any cut would be a good omen, Salman added. “Though logically owing to higher inflation rate there is no room it, but as there has been pressure, the possibility of a cut in interest rate could not be ignored,” he said.

The market throughout the session moved in a band of 400 points, it made a low of 43,037 points and high of 43,453 points and encountered some selling and buying pressures as well.

A leading analyst said the market men were anxiously waiting for the monetary policy announcement a date for which has yet not been announced amid speculations of a date different than usual. However, a general view is that the government was under immense pressure to cut the interest rate as a tight monetary policy has slowed down the credit off-take and purchasing, especially auto financing is badly hurt. Selected buying was witnessed in the cement sector after the latest numbers showed sales increased 9 percent to 4.21 million tons in December 2019, compared to 3.87 million tons in the same month corresponding period.

Index failed to score because of the correction in the oil and gas exploration sector after a decline in crude oil prices trimmed Oil and Gas Development Company, Pakistan Oilfields, and Mari Petroleum.

Arif Habib Limited in their daily market analysis said, “The market moved both ways with an opening of +83 points and oscillated between +246 points and -169 points during the session”. “The oil and gas chain remained under pressure throughout the session, with PSO touching session’s low of 210, but bounced back, crossing 218,” the brokerage house added. The top gainers were Nestle Pakistan, up Rs74 to close at Rs8,075/share, and Service Industries Limited, up Rs38.41 to finish at Rs806.74/share.

Top losers were Pakistan Tobacco, down Rs116 to close at Rs2,204.01/share, and Sapphire Fibre, down Rs42.70 to close at Rs811.30/share. Bank of Punjab was the volume leader with 34.974 billion shares, but lost Rs0.05 end at Rs13.28/share. Askari Bank’s turnover was the lowest with 10.952 million traded shares; however, the scrip gained Rs1 to end at Rs20.91/share.