Wednesday, December 8, 2021

Stocks down on mutual funds’ redemption drive

Stocks on Wednesday succumbed to selloff by mutual funds in overbought shares, whereas concerns over likely monetary tightening also kept the range-bound market in adjustment mode, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.49 percent or 226.29 points to close at 45,676.94 points. Volumes decreased to 476.618 million shares, from 491.787 million on Tuesday. KSE-30 shares index also dipped 0.66 percent or 127.11 points to end at 19,025.55 points level.

Topline Securities in a note said after sideways opening market made an intraday low of 357 points, the cause of which according to market chatter was redemption from funds. Energy sector closed 1.5 percent lower despite higher international oil prices; meanwhile HUBC and ENGRO cumulatively dented the index by 54 points, the brokerage added.

Shahab Farooq, director research at Next Capital, said the market remained range-bound amid across-the-board profit-taking on concerns over hike in interest rates in the next few months.

“Healthy payouts in the upcoming result season are expected to keep the market upbeat going forward,” Farooq added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities said, “The market has been under adjustment mode where overbought situation clipped gains”.

In the upcoming sessions index was likely to see more declines; however it might see some limited gains in patches, Ahmad added.

Of 413 active scrips, of which 150 gained, 246 lost, and 17 remained unchanged.

Arslan Soomro, managing director at KASB Securities said the market remained under pressure today owing to excessive financial leverage, profit-taking and fear of presumed selling from mutual fund investors.

“Stocks are finding their new ranges and sector shifts are happening for the next leg of rally,” he added.

Positive interest was seen primarily in Unity Good and Lotte Chemical, while pressure was seen in refineries, oil and technology sector, Soomro said.

Mehroz Khan, research analyst at Pearl Securities said the mutual fund redemption caused the selling pressure in the market, whereas the speculations that policy rate was likely to remain unchanged further triggered selling in banking stocks.

“Also, ECC has delayed the textile policy for another week. Additionally, the government is all set to hike the power tariff in the current week,” he said.

“We expect the market to witness selling pressure at higher levels. Therefore, we repeat our stance for investors to adopt the ‘sell on strength’ strategy in the coming days,” Khan added.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks closed lower in the earnings season rally on institutional profit taking in overbought scrips and concerns for ongoing political uncertainty.

Investor concerns over falling rupee, rising circular debt and uncertainty over SBP policy announcement this week weighed the index down, Mehanti added.

Island Textile, up Rs128.71 to close at Rs1,844.94/share, and Sapphire Textile, strengthening by Rs26.34 to finish at Rs1041.33/share, were the major gainers. Rafhan Maize, down Rs89.99 to close at Rs9,900/share, and AKD Capital, losing Rs33.69 to close at Rs415.64/share, ended up as the main losers.

Silk Bank Limited led volumes with 42.706 million shares. The scrip gained Rs0.09 to end at Rs1.29/share. Kot Addu Power posted the lowest turnover with 9.563 million shares, and gained Rs0.45 to end at Rs41.01/share.

Source: The News

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