Stocks weaken as volatility weighs

Stocks on Wednesday see-sawed to end up in the red as investors are not ready to lower their guard with federal budget drawing near.

The KSE-100 Shares Index at Pakistan Stock Exchange (PSX) saw an erosion of 0.77 percent or 370.36 points and settled at 47,777.62 points. Volumes improved to 1.35 billion shares from 1.04 billion on Tuesday.

Topline Securities in a note said after a slight positive opening profit-taking gripped the bourse on reports the trade deficit widened 20 percent to $3.6 billion in May 2021 compared to $3.0 billion in April 2021.

The E&P (exploration and production) sector lost 0.70 percent despite higher international oil prices, the brokerage said. Activity was seen in a total of 416 scrips of which 130 moved higher, 274 took stepped down, and 12 ended without any gain of loss by the closing bell.

Ahsan Mehanti at Arif Habib Corp said stocks suffered a battering by pre-budget uncertainty, rising trade deficit, and concerns over World Bank’s revised thin growth forecast of 1.3 percent for FY21. Weak global equities and investor concerns over falling rupee played catalytic role in bearish close, Mehanti added.

KSE-30 shares index shed 0.99 percent or 193.11 points to close at 19,381.81 points. Brokerage Arif Habib Limited in a report said the market remained under pressure during the day.

Kot Addu Power Company proved to be a disappointment for investors, where a dividend declaration of Rs5/share post release of circular debt related funds failed to motivate investors, the report said.

The brokerage said resultantly, the stock came down from an intra-day high to trade below last day’s closing price for most part of the session.

Selling pressure was otherwise observed in oil and gas exploration and production (E&P), steel, cement, oil and gas marketing companies, refinery and technology sectors, Arif Habib report added.

Maaz Mulla at JS Global Capital said the capital market saw another volatile session that ended in losses.

“Worldcall remained the volume leader on back of material information released yesterday that they have entered into a business collaboration agreement with TUFA Telecommunication targeting fiber to the home service rollout across Pakistan,” Mulla said.

Selling pressure was majorly witnessed in banks and cement manufacturer stocks. Cherat Cement lost 2.7 percent, Kohat Cement 1.3 percent, Pioneer Cement 1.1 percent, Habib Bank (HBL) 1.0 percent, Allied Bank 0.9 percent, while Bank Al Ahabib gave up 1.0 percent during the session.

Auto sector however closed on a positive note with Ghandhara Nissan gaining 2.9 percent, Hino Motors 3.1 percent, and Indus Motor closing 4.7 percent higher.

With volatility expected in the days to come, analysts are largely putting their weight behind taking downside as a buying opportunity in construction and exporting sectors.

Island Textile, securing Rs154.12 to close at Rs2,209.12/share, and Indus Motor Company, putting on Rs60.34 to close at Rs1,335.6/share, were the top two gainers of the day.

Rafhan Maize, slipping Rs190 to close at Rs9,600/share, and Nestle Pakistan, shedding Rs61.07 to end at Rs5,715.12/share emerged as the bottom two losers of the day.

WorldCall Telecom remained the highest traded stock with 716.8 million shares and gained 58 paisas to close at Rs4.22 share. Hum Network, with 75.8 million shares, was the second top traded scrip and it strengthened by 27 paisas to close at Rs8.69/share. With 59.62 million shares K-Electric Limited was the third largest volume-maker and it ticked up by 07 paisas to finish at Rs4.22.