PSX rally cut short as profit-taking trims gains

Stocks snapped a multi-session rally on Tuesday in mixed trade after overbought cyclical shares were hit by a profit-selling-led correction, amid an extended trigger-drought, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.74 percent or 293.99 points to close at 39,577.62 points, while KSE-30 shed 0.94 percent or 162.93 points to end at 17,157.53 points.

Sateesh Balani, director research at Ismail Iqbal Securities, said, “The equities remained mixed throughout the session and closed negative as investors opted for profit-taking mainly in cement sector, while index heavyweight sectors particularly banks, picked up momentum”.

Cements, E&Ps (exploration and production) sector, and OMCs (oil marketing companies) dragged the index, cumulatively shedding 189 points, Balani added.

Of 422 active scrips, 120 moved upward, 282 downward, while 20 were unchanged. Trading volume was almost unchanged at 593.981 million shares, compared with 539.315 million shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The market recorded decline as it has entered an overbought zone, and downward correction was due”.

In the absence of any big positive developments, several financial institutions, individuals, and some other companies resorted to book profits, Ahmed said.

Furthermore, he said, the market came under selling pressure as higher than expected inflation numbers diminished the hopes of a further cut in the interest rate.

“The yields have gone up in the secondary market for the long tenor bonds as the inflation rate for July stood around 9.30 percent, while the benchmark interest rate is now standing at 7 percent,” Ahmad added.

Topline Securities in a report said, “The traditional volatility was seen at the bourse, where at one point, the index gained to make an intraday high of 459 points”.

However, stocks succumbed to selling pressure as investors came in to book profits above 40,000 points mark, breaking the winning streak, and closing at 39578 points, the report said.

Saad Rafi, head of equity sales at Al Habib Capital Markets, said, “Downward correction was due as cement and steel sectors in a recent rally had gone up by 30 to 40 percent, so creating room for some adjustment”.

Selling from mutual funds and insurance companies led to negative slide as the market at one stage was up by 350 points and breached the barrier of 40,000 points level, he said.

Moreover, Rafi said rise in inflation rate showed the central bank was likely to maintain status quo level, but if August and September numbers went up, the benchmark interest rate might see a spike by end September. “Next rally is expected to be centered in banks and E&P (exploration and production) sector,” Rafi added.

The top gainers were Sapphire Fibre, gaining Rs54 to close at Rs786/share, and Sapphire Textile, up Rs46.01 to finish at Rs890/share, while Island Textile, down Rs81.03 to close at Rs1012.00/share, and Nestle Pakistan, losing Rs40 to close at Rs6,450/share, turned out the main losers.

TRG Pakistan Limited posted the highest volumes with 45.617 million shares, but lost Rs3.15 to end at Rs47.74/share, whereas Pakistan International Bulk recorded the thinnest turnover with 12.473 million shares and lost Rs0.19 to end at Rs11.11/share.