Stocks slip on profit-selling ahead of long weekend

Stocks moved both ways to end lower on Wednesday as profit-selling settled in ahead of a long weekend starting tomorrow (May 22, 2020) with investors slipping into risk-off mode, especially in the wake of Moody’s report that it was reviewing the top local banks for downgrade, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.66 percent or 225.74 points to close at 33,932.81 points, while KSE-30 shares index shed 0.86 percent or 127.71 points to end at 14,795.32 points.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The market portrayed a mixed pattern mainly because of settlement of future contracts or commonly known as rollover week effect”.

Furthermore, with long holidays ahead and only two sessions available for settlement, investors booked available gains, squaring their open positions, Ahmad said.

Of 344 active scrips, 120 gained, 212 lost, and 12 held status quo. The ready market volumes slumped to 165.101 million shares, as compared to 247.798 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed lower on prevailing prebudget uncertainty, while concerns over the outcome of Moody’s review of five Pakistan banks for ratings downgrade, weighed on the PSX".

Zia Shafi, senior investment advisor at Intermarket Securities, said, “The profit-selling emerged mainly owing to long holidays approaching due to Eid as investors were mostly shy of making new fresh investment in the equities".

However, after eid holidays one may witness some pre-budget rally on developments trickling down from expected announcements for specific sectors and till such time investors would wait for an appropriate time to enter the market, Shafi added.

Saad Rafi, head of equity sales at Al Habib Markets, said, some negativity prevailed in the banking sector after Moody’s placed Pakistani banks' rating under review in line with country's rating status and their exposure to the government debt.

New alarm bells went off after the COVID-19 cases in the country shot up to 2,000/day and if this

trend continued the government might go for a re-lockdown, Rafi added.

Sateesh Balani, director research at Ismail Iqbal Securities, said, “Pakistan equities couldn't sustain momentum and turned negative with lackluster trading activity as investors pursued profit-taking in some of the sectors”.

Balani further said the auto sector remained in the limelight as companies resumed operations from this week after having zero sales in previous month. “Index heavyweights, fertilisers, E&Ps (exploration and production) and banks dragged the index down by 203 points,” he added.

The top gainers were Pakistan Tobacco, up Rs39.50 close at Rs1639.50/share, and Pakistan Services, gaining Rs39.34 to finish at Rs1,000/share. Sanofi-Aventis, down Rs51.75 to close at Rs967.39/share, and Sapphire Fibre, losing Rs44.99 to close at Rs650.01/share, ended up as the main losers.

Hum Network recorded the highest volumes with a turnover of 11.731 million shares but lost Rs1 to end at Rs9.61/share.

Pakistan International Bulk’s turnover was the lowest with 3.167 million shares, whereas it gained Rs0.16 to end at Rs9.15/share.