Stocks fall as retreating oil triggers energy rout

Stocks on Monday suffered casualties after retreating international crude oil triggered an energy rout, while cyclical also bore the brunt of profit-selling, dealers said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 shares index lost 0.44 percent or 204.32 points to close at 45,726.68 points. Volumes increased to 543.645 million shares, from 531.065 million on Friday. KSE-30 shares index also dipped 0.47 percent or 89.89 points to end at 19,019.75 points.

Topline Securities in a note said stocks struggled to sustain above the 46,000 points in a volatile session and eventually succumbed to selling pressure, while a dip in international oil prices dented energy sector.

Salman Ahmad, head of institutional sales at Aba Ali Habib said, “The market has been under pressure and facing resistance beyond 46,000 points. Selling was mostly concentrated on oil and gas sectors owing to overbought position and decline in crude oil prices”.

“The overall sentiment has been positive as there has been general belief that the corporate earnings for the quarter ended December 31, 2020 may show significant gains owing to improved economic activities in the post COVID period,” he said.

Muzamil Khan at BMA Equity desk said the index opened on a positive note, mainly on the back of buying activity in banking and pharmaceutical sectors, but remained under selling pressure later in the second half, with profit-booking in exploration and production, cement and steel sectors.

KSE-100 Index saw volatile activity throughout the day, touching its intraday high at 46,047 points and intraday low at 45,714.17 points, he said.

“Going forward we remain bullish on long-term and any dip in market should be seen as opportunity to buy in banking, cement and steel stocks,” Khan added. Of 427 active scrips, 163 advanced, 245 retreated, and 19 remained unchanged.

Mehroz Khan, research analyst at Pearl Securities, said "AstraZeneca’s COVID-19 vaccine has been approved for emergency use in Pakistan which triggered healthy interest in pharmaceutical stocks".

“However, banking sector remains in limelight as the sector’s deposits grew 22 percent YoY in 2020, while a cut in gas supply to industry is likely amid LNG crisis and the government is said to have increased unified weighted average tariff by Rs1.80/unit which may result in profit-taking,” he said.

"Going forward we expect the market to move both ways and we recommend investors to adopt the “sell on strength” strategy in the ongoing week,” Khan added. Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed lower in the earnings season amid pressure in global equities and institutional profit-taking in overbought scrips.

Investor concerns over rising circular debt projected near Rs2.8 tillion for FY21, uncertainty over terms of new IMF program, surging trade deficit, and weakening rupee dragged the stocks down, Mehanti added. Rafhan Maize, up Rs90 to close at Rs9,600/share, and AKD Capital, strengthening by Rs30.78 to finish at Rs441.31/share, were the major gainers of the day.

Nestle Pakistan, down Rs158.80 to close at Rs6,455.01/share, and Phillip Morris Pakistan, losing Rs62.77 to close at Rs1,437.23/share, suffered most losses. TRG Pakistan Limited led volumes with 47.593 million shares. The scrip gained Rs6.98 to end at Rs103.49/share. Faysal Bank posted the lowest turnover with 15,356 million shares, losing Rs1.49 to end at Rs21.75/share.