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August 11, 2020

Stocks weaken as capital gains weigh on blue chips


August 11, 2020

Stocks ended tad lower on Monday as institutions amassed capital gains, selling overbought blue chips in choppy trade, as all eyes are currently set on the outcome of the upcoming MSCI quarterly review, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.29 percent or 114.93 points to close at 39,914.76 points, while KSE-30 gave up 0.20 percent or 35.41 points to end at 17,261.63 points.

Arif Rehman, head of research at Fortune Securities, said, “The market moved in narrow band and saw volley of buying and selling as for the last over six weeks, index had been gaining steadily”.

However, selective stocks made new highs, mostly in the cyclical sector due to positive outlook on expectations of a jump in demand with the opening of all the business houses, Rehman added.

Of 415 active scrips, 118 moved up, 266 fell, and 31 ended neutral. Volume was down at 576.547 million shares, against 728.768 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed lower amid pressure in cement, fertilizers, and oil scrips on institutional profit-taking in overbought market”. Investor concerns over rumours of deteriorating Pakistan-Saudi relations, uncertainty over parliament’s approvals of FATF-related bills, rupee instability, FBR’s online transaction oversight and penalties under the Finance Act, and weak global crude oil prices led to bearish close, Mehanti added.

Faisal Shaji, strategist at Standard Capital, said, “The benchmark witnessed anticipated profit-taking across the board, however, market was still hovering around 40,000”.

Volatility was in control for the last many days, wherein individual investors booked gains, Shaji said. “Equities are likely to remain volatile during ongoing result season,” Shaji added. Muhammad Saeed Khalid, head of research at Shajar Capital, said, “KSE-100 index marked an intra-day high of 40,195 points amid lacklustre activity”.

This was mainly due to the uncertainty that Pakistan was likely to renew the contract for $3.2 billion dollars worth of deferred oil facility, Khalid said. “Further, the market also marked capital gains ahead of MSCI quarterly review, scheduled on August 12, 2020,” he said. Khalid also said the market earlier could not react on the Moody's upgrading Pakistan’s economic outlook to stable.

Fahad Rauf, deputy head of research at Ismail Iqbal Securities, said, “Equities remained volatile despite news of the end of the lockdown in the country, while investors chose to book gains after uncertainty arose on deferred oil facility from Saudi Arabia”.

PNSC closed at its upper-lock, increasing by 7.50 percent as the government announced new shipping policy over the weekend, Rauf said.

“Index heavyweights like banks, E&Ps (exploration and production) and cements dragged the index, shedding 98 points,” he added.

The top gainers were Unilever Foods, gaining Rs345 to close at Rs9,000/share, and Bata Pakistan, up Rs116.82 to finish at Rs1,674.49/share, while Rafhan Maize, down Rs100 to close at Rs7,950/share, and Island Textile, losing Rs64.07 to close at Rs921.33/share, were the main losers.

Unity Foods posted the highest volumes with 81.623 million shares and Rs0.11 to end at Rs3.35/share, whereas K-Electric Limited’s turnover was the lowest with 13.515 million shares, and it lost Rs0.11 to end at Rs3.68/share.