Stocks down as profit-selling disrupts result rally

Stock gave up gains on Thursday as wobbly oil and equities around the world spurred profit-selling in overbought heavyweights, interrupting the result season rally for now, dealers said.

KSE-100 shares index, the benchmark of Pakistan Stock Exchange (PSX), shed 0.63 percent or 292.08 points to end at 46,166.05 points. Volumes ballooned to 844.002 million shares, from 610.940 million on Wednesday. KSE-30 shares index suffered a loss of 0.57 percent or 111.16 points to end at 19,259.11 points.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities said the selling was due owing to the rollover period; however, positivity centered on the earnings announcements was likely to keep any big correction at bay.

“Though overall sentiment has been strong, the overbought situation, with the index hovering around 46,500, attracted profit-selling in heavyweight scrips, which is healthy for the market to adjust before the close of the week,” Ahmad added.

Traded volume (regular + future) increased 18 percent day-on-day to 1,051 million shares, the highest after September 8, 2020 (1,077 million shares), while traded value decreased 12 percent day-on-day to Rs42.6 billion.

Muhammad Saeed Khalid, head of research at Shajar Capital, said investors booked capital gains mainly owing to the rollover week, while the market remained sluggish on Thursday, marking an intraday low of 348 points. The index languished despite higher volumes of 355 million shares recorded in the Silk Bank Limited mainly on the investors’ aggressive stance in the stock on the expected acquisition by the Fauji group, he said.

“Despite expectation of higher OMCs (oil marketing companies) sales volume in January 2021, investors remained net-sellers in the oil scrips mainly to buy on dips,” Khalid added.

Of 405 active scrips, 152 gained, 236 lost, and 17 remained unchanged.

Zaid Aftab, research analyst at Pearl Securities said the market suffered correction primarily tracking the slumping global markets, which dented the sentiments.

Profit taking was observed in all the major sectors on the second last day of the rollover week, he said.

Furthermore, NEPRA indicated Rs1.60/unit increase in power tariff against fuel adjustment, while ECC once again delayed the approval of textile policy and revision of OMCs margins, which weighed on the index, Aftab added.

Topline Securities in a note said decline in international markets and slight increase in cutoff yields in last T-bills’ auction made investors tentative. TRG, as the major decliner, dented the index by 60 points, while investors interest was tilted towards cements sector where LUCK, DGKC, and MLCF closed higher.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bearish in the earnings season rally owing to a slump in global stocks and weak crude oil prices.

Investor concerns over a surge in current account deficit in December 2020, rising circular debt, and recent hike in power tariff for industrials dragged the index down amid pressure in the future contracts in the rollover week, Mehanti added.

Bata Pakistan, up Rs99.55 to close at Rs1599.55/share, and Khyber Tobacco, strengthening by Rs42.69 to finish at Rs611.90/share, were the top gainers of the day.

Sapphire Textile, down Rs82.50 to close at Rs1,017.50/share, and Colgate Palmolive, losing Rs55 to close at Rs3,000/share, ended up as the worst losers.

Silk Bank Limited led volumes with 354.969 million shares, while Unity Foods Limited posted the lowest turnover with 14.802 million traded shares.