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January 28, 2020

Stocks slip ahead of monetary policy; E&P catches oil flu


January 28, 2020

Stocks limped lower on Monday as caution reigned supreme in a sluggish session a day ahead of the monetary policy announcement, while hydrocarbon chain caught flu after crude oil started sneezing following coronavirus outbreak in China, dealers said.

Pakistan Stock Exchange’s KSE-100 shares index lost 0.22 percent or 93.79 points to close at 42,539.23 points, while KSE-30 followed suit with a low of 0.35 percent or 68.97 points to end at 19,737.88 points.

Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed bearish amid global equity selloff and slump in global crude oil prices after coronavirus outbreak”.

“Uncertainty over SBP (State Bank of Pakistan) policy rate announcement on Tuesday (today), dismal financial results in oil refineries, cement sector stocks and uncertainty of state-run entities’ privatisation weighed on the index,” Mehanti added.

Of 350 active scrips, 166 were up, 169 down, and 15 ended unchanged. Volumes bit improved to 198.479 million shares, as compared with the turnover of 173.043 million shares in the previous session.

Sateesh Balani, Director Research at Ismail Iqbal Securities, said “The index remained range-bound throughout the session with increased trading activity”.

“Overall, exploration and production sector limited index performance in line with a drop in international oil prices, while cements led gains after Kohat Cement announced commercial operations of its new capacity,” Satish added.

Salman Ahmad, head of institutional sales at Aba Ali Habib said “The overall trend was bit sluggish because of commencement of rollover week as several large accumulations from the investors would be adjusted in it”.

“Traders and institutions were mostly on the back foot waiting for the monetary policy announcement and a drop in crude oil prices by more than 2 percent in the last two sessions, owing to coronavirus eruption in China, raising concerns for the economies in the region,” Ahmad added.

A leading trader said, “The investors stayed away from the market because of the monetary policy announcement. Though, general consensus is that SBP will keep the interest rate at 13.25 percent for more than six months”.

“Furthermore, it is feared that given the inflation rate, the policy rate might see some rise as there is a remote possibility the inflation numbers for January might cross 13 percent mark, creating an excuse for monetary tightening,” the trader said.

Arif Habib Limited in their daily market roundup said, “International crude prices were significantly down at the opening that caused selling pressure in exploration and production stocks”.

“Likewise, rest of the oil and gas chain bore pressure among refineries and oil marketing companies. Cement sector, on the other hand, performed well with Maple Leaf Cement and Kohat Cement hitting upper circuits, whereas other cement stocks also traded well,” the brokerage added.

The highest gainers were Gatron Industries, up Rs28 close at Rs539/share, and Mehmood Textile, Rs25 to finish at Rs488/share.

Companies that booked highest losses were Unilever Foods, down Rs49 to close at Rs7,601/share, and Shezan International, down Rs29.99 to close at Rs519/share.

Maple Leaf Cement trade volume was the highest with 25.961 million shares, whereas the scrip gained Rs1.29 end at Rs24.83/share.

Dewan Cement’s turnover was lowest with 5.728 million shares and it gained Rs0.42 to end at Rs9.73/share.