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January 22, 2020

Stocks fall as results seen weak amid fading rate cut hopes


January 22, 2020

Stocks on Tuesday buckled under selling pressure amid buzz that a monetary softening was unlikely given the higher inflation numbers, while investors were also wary of financial results, seen somewhat weak owing to ongoing economic slowdown, dealers said.

Pakistan Stock Exchange’s (PSX) KSE-100 shares index lost 0.28 percent or 121.15 points to close at 42,626.47 points, while KSE-30 index shed 0.38 percent or 76.13 points to end at 19,722.71 points.

Ahsan Mehanti from Arif Habib Corporations said bearish activity persisted in the earnings season amid global equity selloff and pressure in global crude oil prices.

“Oil and banking scrips outperformed on higher local oil prices and speculations ahead of banking sector annual payouts.”

However, uncertainty over SBP (State Bank of Pakistan) policy announcement on January 28, foreign outflows, and worries over surging energy sector circular debt weighed on the stocks, Mehanti added.

Of 344 active scrips, 127 gained, 205 lost, and 12 ended neutral. The ready market volumes improved to 177.567 million shares, compared to 173.897 million shares traded on Monday.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “As expected adjustment continued as market is facing resistance crossing 43,000 points level, while selling is expected to put stay for a couple more sessions till technical correction is over”.

Moreover, Ahmad said monetary policy date had been announced but inflation numbers were a cause of worry because recent increase in commodity prices was likely to delay any rate cut in the immediate future.

A leading trader said the market was under selling pressure as several institutions were on selling side after exhausting most of the allocations made for January.

An analyst said with the rollover week drawing near, some investors were squaring their positions ahead of any other major declines.

“Investors are also a bit hesitant because of the financial results announcements as they will be a reflection of the current state of economy.” Barring few, most of the companies were likely to report lesser profit or losses in the quarter ending December 31, 2019, the analyst added.

Habib Metro Financial Services in a note said the investor interest picked up in fertilisers after rumors the government was removing GIDC (Gas Infrastructure Development Ces) so as to reduce the prices of these farm inputs.

Arif Habib Limited in their daily market analysis said, “The market continued facing downward pressure with the benchmark index slipping 409 points after gaining 218 points earlier in the session”.

“Whereas PSO (Pakistan State Oil), among oil and gas plays and FFBL (Fauji Fertilizer Bin Qasim), among fertiliser sector shares, contributed positively to the index, however, selling in cement, steel, exploration and production as well as refinery sectors faced selling pressure, whereas banking sector stocks saw price gains in MoC (market on close),” the brokerage added.

The highest gainers were Akzo Noble Pakistan, up Rs13.28 close at Rs270.64/share, and Service Industries Limited, up Rs11.86 to finish at Rs815/share.

Companies that booked highest losses were Sanofi-Aventis, down Rs28.88 to close at Rs701.12/share, and Indus Dyeing, down Rs27 to close at Rs500/share.

TRG Pakistan Limited recorded the highest volumes with 17.460 million shares, gaining Rs0.25 to end at Rs27.67/share.

Lotte Chemical’s turnover was lowest with 4.094 million shares; however, the scrip gained Rs0.09 to end at Rs14.74/share.