Index sheds a percent on profit-taking in select stocks

Stocks opened the week with a wobble caused by across-the-board profit-booking by local and foreign investors alike, centered in the overbought shares, amid concerns over new brokers regime aimed at ensuring global anti-terror-financing compliance, dealers said on Monday.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.97 percent or 420.14 points to close at 42,747.62 points, while KSE-30 shares index followed suit with a low of 0.99 percent or 198.43 points to end at 19,798.84 points.

Analyst Ahsan Mehanti from Arif Habib Corporation, said, “Pressure remained in selected overbought scrips across the board amid uncertainty in global equities and investor concerns over outcome of new regime for brokerage services”.

Foreign outflows, investor concerns over falling local cement prices, slump in auto sales, and surging circular debt crises contributed to bearish close, Mehanti added.

Of 353 active scrips, 70 were up, 267 down, and 16 ended unchanged. Volumes shrank to 173.897 million shares, against a turnover of 211.406 million in the previous session.

Shahab Farooq, director research at Next Capital, said, “Across the board profit-taking was witnessed amid thin volumes”.

“Concerns of resurgence of inflationary pressures due to increased food prices that might result in delays in monetary easing emerged as a major cause of concern.”

Additionally, the waiver of GIDC (Gas Infrastructure Development Cess) on gas to fertiliser manufacturers resulted in pressure in Engro and EFERT in anticipation of cut in urea prices that was negative for the two, Farooq added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said “solitary reason for the decline in equity prices was overbought situation, where the index sharply climbed by more than 2000 points in almost two weeks”.

“The subdued crude oil prices and political polarization also took their toll. Going forward the market has some more room for downward technical correction because of upcoming rollover week”.

However, supporting development required to rebuild the confidence and attract foreign as well local investment, Ahmad added.

Samiullah Tariq, director research at Arif Habib Limited, said due a rise in some of the food products lately, investors were worried about the inflation numbers as they foresee it to remain on the higher side, diluting hope of any rate cut in immediate term.

“The news that the government, in order to reduce fertiliser prices, has removed GIDC on fertiliser manufacturing, dismayed the sector as it will hit the companies’ profitability,” Tariq added.

A leading trader said that another factor that sent the market in a dormant mode was the FATF (Financial Action Task Force) meeting in Beijing.

Pakistani team would try to answer every question raised by the FATF officials during the three-day meeting, the same trader said.

The highest gainers were Colgate Palmolive, up Rs86.33 close at Rs2,461.33/share, and Mari Petroleum, Rs75.08 to finish at Rs1,440.26/share.

Companies that booked highest losses were Sapphire Textile, down Rs35.99 to close at Rs900.01/share, and Indus Dyeing down Rs30.05 to close at Rs527/share.

Engro Fertiliser recorded the highest volumes with a turnover of 15.269 million shares and lost Rs4.13 to end at Rs71.17/share.

Fauji Fertiliser Bin’s turnover was the lowest with 4.810 million shares, whereas the scrip gained Rs1.1 to end at Rs21.11/share.