PSX falls as overbought equities invite selling

Stocks on Thursday snapped an extended gaining streak after funds booked profits to make the most of the rally that has led the market into semi overbought zone, ahead of rollover week, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.60 percent or 226.40 points to close at 37,578.21 points and its KSE-30 index shed 0.73 percent or 120.26 points to end at 16,287.44 points.

Topline Securities in its daily market review said, “The market opened on a positive note, making an intraday high of 302 points”. However, profit-taking became the order of second half as investors were wary of rollover week and upcoming monetary policy, the brokerage said adding, cements, oil and gas exploration and production, oil marketing companies, and autos were the major decliners in today’s trading session. As many as 403 scrips were active today. Of that total 129 gained, 250 weakened, and 24 ended neutral. Volumes slumped to 379.281 million shares from 405.508 million on Wednesday.

Zia Shafi, senior investment advisor at Intermarket Securities, said, “During the current rally appreciated sharply, especially cement sector, and was now undergoing some adjustment owing to a bit overbought situation”.

Downward correction was witnessed in several sectors because of the rollover week, as investors were selling their entities adjusting their portfolios, he said.

“Now investors’ interests will find a direction after Eid holidays, where a ‘buy on dips’ strategy is recommended,” Shafi added.

Analyst Ahsan Mehanti from Arif Habib Corporation, said, “Stocks closed bearish amid pressure on concerns for national security alerts and ongoing provincial emergency”.

Foreign outflows, dismal financial results for autos and industrials amid weak fiscal outlook and political uncertainty dragged the stocks down, Mehanti added.

Faisal Shaji, strategist at Standard Capital, said throughout the week market remained volatile. “During board meeting announcements markets are usually volatile,” he said adding, “The benchmark index is testing 38,000 for the second time this week”.

It was moving in range 37,600-38,000 and any breaking of 37,600 would bring the market down based on trends, Shaji said. “Investors are resorting to book gains or cut losses in high flying cements and some truck companies, he added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The market before Eid holidays and rollover of future contract has been in the phase of adjustments as it turned heavy near 38,000 points level”.

He said the market in the last three weeks or so had increased by 2,800 points and was waiting for some correction. “The fundamentals are strong but need some positive triggers to help cross the 38,000 points mark, currently facing resistance,” Ahmad added.

Shahab Farooq, director research at Next Capital, said, “The market closed negative, after five consecutive positive closings gaining 3.1 percent”.

Index opened positively and remained positive for most of the session with profit-taking seen in cements, E&Ps (exploration and production), and select banks during the final hours of the day, Farooq added.

The top gainers were Gatron Industries, gaining Rs40 to close at Rs655/share, and Millat Tractors, up Rs37.05 to finish at Rs825.41/share, while Nestle Pakistan, down Rs81.67 to close at Rs6,718.33/share, and Highnoon Laboratory, losing Rs27.48 to close at Rs601.08/share, were the main losers. Unity Foods Limited posted the highest volumes with 38.126 million shares, but lost Rs0.16 to end at Rs12.63/share, while Siddiqsons Tin registered the lowest with 8.018 million shares; however, it gained Rs0.32 to end at Rs11.01/share.