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Saturday December 04, 2021

Stocks deepen nosedive on foreign outflows

November 26, 2021

Stocks on Thursday deepened their ongoing nosedive for fourth session in a row as foreign outflows drained the market massively, while a bleak currency outlook soured the sentiment further, traders said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index shed almost 428 points or one percent to close at 43935.75 points.

Ahsan Mehanti at Arif Habib Corp said stocks closed under pressure on concerns over surging bond yields, reports of over Rs50 trillion government debt, and rupee instability.

“Uncertainty over conditions of resumed IMF programme, mini budget taxes, Public Sector Development Programme spending, and petroleum development levies weighed on the trade,” Mehanti observed.

JS Research in its market wrap said stocks remained under pressure with major blow coming from foreign selling.

“We believe market participants should now look out for announcements on the economic side, where it is expected the inflation reading for November will set the direction for the index going forward,” the brokerage added.

Arif Habib Limited (AHL) in a post-market note said bears remained in control at the bourse for the fourth consecutive session owing to concerns over devaluation of rupee and last leg of foreign selling spree.

Equities continued to remain under pressure in the roll-over week despite attractive valuations in terms of low P/E multiples and high dividend yields, the brokerage said.

It added that technology stocks basked in the limelight throughout the day as traders betted on high-beta stocks to make quick trading gains.

On the flip-side, Institutional investors went for value hunting in the last trading hour, the AHL report said.

Sectors contributing to the performance included commercial banks (-140 points), power (-59 points), fertiliser (-50 points), cement (-48 points), and pharmaceuticals (-432 points).

Volumes slumped 37.1 percent to 195.2 million shares from 310.4 million shares recorded on Wednesday, while traded value shrank 35.2 percent to $48.0 million compared to $74.0 million a day earlier.

Topline Securities said investors were concerned over continuous foreign selling ahead of MSCI reclassification next week.

The major laggards were HUBC, LUCK, UBL, and SEARL, which together weakened the index by 184 points.

Out of total active stocks, 121 advanced, 185 retreated, while share values of of 22 remained unchanged.

Pearl Research in a note said the benchmark index tumbled again and closed below 44,400 points.

“The bears will remain in control below 46,500, move above this level would muddy the bearish water,” the brokerage said adding, “On the downside, 43,970 and 43,700 points are the support levels”.

Nestle Pakistan posted best gains of the day by grabbing Rs.41.99/share, followed by Blessed Textile, up Rs26.80/share.

Unilever Foods lost Rs500/share to lead the losers, followed by Sanofi-Aventis, which gave up Rs.48/share at the end of the day.

Analysts at Darson Research said local equities remained bearish, continuing Wednesday’s tumultuous trend.

“Concerns arising from surging foreign debt and liabilities (outstanding), continuous foreign funds outflow, upcoming announcement of a minibudget ahead of IMF loan programme resumption, and future roll-over week were the major reasons behind Thursday’s bearish spell,” the brokerage said in its report.

Companies that recorded significant turnover were TPLP, Byco Petroleum, Hub Power Co, World Telecom, TRG Pakistan, Hascol Petroleum, First National Equities, Modaraba Al-Mal, Aisha Steel Mills, and Pakistan Refinery.