Stocks flat as falling crude oil bites into E&Ps

Stocks on Tuesday flatlined as energy sector succumbed to profit-taking after international crude oil slipped, while investors mostly played safe, taking cues from tidings arriving from the budget front, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.16 percent or 54.03 points to close at 34,803.60 points and its KSE-30 shares index followed suit with a high of 0.12 percent or 17.75 points to end at 15,188.41 points level.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “Limited improvement was seen at the stock market and the movement was also observed in investment and blue-chip shares mainly owing to budget-related developments”.

Ahmed said, globally, the stock markets recorded healthy gains, but local bourse was more likely to move in a narrow band until the budget is out.

Of 357 active scrips, 190 went up, 143 retreated, and 24 remained unchanged. Volumes improved to 238.282 million shares, as compared with 222.416 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation, said, “Stocks closed higher in the pre-budget rally at PSX on speculations ahead of federal budget announcement this week”.

Mid-session pressure remained on investor concerns for ongoing gap over international Monetary Fund (IMF) and finance ministry’s revenue collection targets and likely burden on corporate sector, Mehanti added.

He said expectations of economic recovery amid high PSDP outlay in the federal budget FY21, expectation of release of IMF tranche, amid second review of loan programme and government commitments to resolve circular debt issue to ease power crises kept the PSX buoyed, Mehanti added.

A trader said the stock market during the session moved in a narrow band as investors bought and sold shares taking cue from reports pouring out from the budget front. “Few picked sizeable deals in cement, steel, auto and other manufacturing sector companies betting on incentives to lift economy from the present,” he added.

He further said export-based companies also witnessed some buying amid rising demands for restoration of zero rate regime as the payments of refunds collection remained the most cumbersome procedure.

An analyst said oil shares were on the losing side, declining by Rs0.20 to Rs 10.17 because of profit-taking and also a drop in crude oil price.

He added that crude oil prices dropped by as much as 2.12 percent on development that crude oil output cut was unlikely to extend further, and the supply would be higher from next month.

Faizan Munshey, head of foreign institutional sales at Next Capital, said, “Equities remained in search of direction in the absence of any major positive news flow that could spur active buying”.

“Going forward, market sentiments are likely to be driven by the annual budget, scheduled to be announced on Jun 12,” Munshey said.

The top gainers were Nestle Pakistan, up Rs110 to close at Rs6,690/share, and Sanofi-Aventis, which gained Rs23.86 to finish at Rs873.99/share. Unilever Foods, losing Rs596 to close at Rs9,303.00/share, and Rafhan Maize, shedding Rs134.99, to close at Rs6,955.01/share, were the main losers. Lotte Chemical topped the volume chart with 36.278 million shares and gained Rs0.73 to end at Rs10.49/share, while Hascol Petrol with a turnover of 5.1534 million shares had the thinnest turnover and it lost Rs0.21 to end at Rs14.56/share.