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September 16, 2020

Stocks hit by late tech rout amid economic concerns

Business

September 16, 2020

Stocks fell on Tuesday as eleventh-hour selloff in technology shares pared the early cements-led gains, amid concerns over the outcome of the FATF meeting and a sluggish economic outlook for this fiscal year, dealers said.

KSE-100 Shares Index, the benchmark of Pakistan Stock Exchange (PSX), lost 0.43 percent (184.89 points) to finish at 42,346.42 points. The ready market volumes improved to 662.804 million shares, compared to 509.522 million on Monday.

Salman Ahmad, head of institutional sales at Aba Ali Habib, said, “The market ended up in the negative column owing to last one-hour selling in IT related companies, where financial results were below market expectations”.

It was mostly a technical correction as after every two days investors had to settle their outstanding shares, which countered some selling pressure, amid concerns over FATF meeting, Ahmed said.

KSE-30 shares index lost 0.51 percent (92.36 points) to end at 17,942.33 points.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks closed bearish led by select scrips across the board on institutional profit-taking amid consolidation post earnings season, while oils and fertilisers outperformed, supported by robust August sales”.

Dismal August exports numbers, Asian Development Bank’s grim growth outlook, concerns over rising energy sector circular debt, and weakening rupee weighed the index down, Mehanti added.

Trading activity was recorded in 438 active scrips, of which 140 gained, 281 lost, and 17 stayed inert.

Muhammad Saeed Khalid, head of research at Shajar Capital, said, “The stock market remained sluggish during the day, marking an intra-day low of 268 points”.

The index remained volatile, despite the announcement of remittances numbers, he said.

“The intra-day high of 300 points was mainly due to China-Pakistan agreement and reports that Asian Development Bank has induced volumetric activity,” Khalid adeed.

Arsalan Soomoro, head of equity sales at KASB Securities, said, “The value traded improved day-on-day to $111 million but the volatility continued in the high beta stocks”.

“Investors await new triggers, specifically around FATF bills’ passage through assemblies.”

“The reopening of schools today is naturally expected to bring the second wave of COVID-19 cases - as seen in the other countries - but the downside to the market is limited, at best given strong local interest,” Soomro said.

Muhammad Jawaid Vohra from the BMA Capital said, “The benchmark index has been facing resistance near 43,000 points level due to a substantial rally in the last two months”.

Any dip from here in the main board sectors like E&P (exploration and production) and banks should be considered a buying opportunity as the valuations of the scrips from these sectors were still attractive, Vohra added.

Nestle Pakistan, up Rs213 to close at Rs7,000/share, and Unilever Foods, gaining Rs100 to finish at Rs13,500/share, posted the highest gains, while Gillette Pakistan, down Rs24.99 to close at Rs315.01/share, and Thal Industries Corporations, losing Rs20.91 to close at Rs258.08/share, lost the most in the day.

Hascol Petrol led volumes with 63.860 million shares, down Rs0.24 to end at Rs22.75/share, while Jahangir Siddique Corporation saw at the lowest rung of the turnover ladder with 16.371 million shares, shedding Rs0.45 to end at Rs30.25/share.