Stocks undergo correction after six-day rally

Updated 05 Aug 2020

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Benchmark doddering at such dizzy height sways both ways, fuelling high degree of volatility. — Dawn/File
Benchmark doddering at such dizzy height sways both ways, fuelling high degree of volatility. — Dawn/File

KARACHI: The stock market took a breather on Tuesday after a six-day gaining streak. It started out on a bullish note and the KSE-100 index surged to intraday high by 459 points, hitting the six-month uppish mark of 40,330.

The benchmark doddering at such dizzy height swayed both ways, fuelling high degree of volatility, but finally gave way to profit-taking mainly by the institutions. That sent the index scurrying down by 293.99 points (0.74 per cent) and close at 39,577.62.

Foreigners were net buyers for the second day and the local individuals also continued to build positions picking stocks at dips. However, institutions decided to err on the side of caution given the results season ahead.

The volume increased 10pc over the earlier day to hit 594 million shares which featured a recent high with cement leading the charts at 100.3m shares. Among scrips, TRG topped the turnover with 45.6m shares changing hands. Traded value also edged higher by 3pc to reach $158.5m.

Analyst Ahsan Mehanti contended that the stocks’ decline was fuelled by higher than expected CPI of 9.3pc for July and increase in the National Saving Scheme rates. Investors started to speculate on the SBP policy stance amid higher inflation.

Selling activity was mainly observed in cement, pharmaceuticals, exploration and production, refinery and oil marketing sectors. On the flip side, banking scrips were gainers with most stocks turning green as increase in yield on government papers in the secondary market fuelled investors’ interest.

According to analysts at Arif Habib Ltd, sectors contributing to the day’s performance included cement, lower by 97 points, E&P 51 points, technology 50 points, oil and gas marketing companies 39 points and pharma 32 points while banks added 45 points.

Stocks that contributed po­­sitively to the index incl­uded United Bank, up 71 points, Dawood Hercules 32 points, Engro Corpora­tion 12 points, AGP 12 poin­­ts and PSX 11 points. On the other hand, those that pulled the benchmark down were: Lucky Cement, decli­n­ing by 49 points, TRG 33 points, Oil and Gas Devel­o­pment Company 32 points, Pakistan State Oil 26 points and Searle Pharma 24 points.

Published in Dawn, August 5th, 2020