KSE-100 Index: Daily Overview – October 19

After two relatively stable days, the KSE-100 index dropped 271 points on Wednesday, October 19 to close at 11,640. The index crossed the 12,000 barrier last week, but failed to stabilise and has since nose-dived.

The market opened with a gap of around 50 points, largely due to POL’s result announcement, but a selling spree thereafter throughout the board did not allow the investors to settle in. POL declared earnings of Rs. 14.61 for the quarter, while expectations were around Rs. 12.5. The positive announcement initiated a rally in the scrip, but overall pressure forced POL to close in the negative zone.

A major reason for the immense dip in the market was the off-market transaction of HUBCO, where around 140 million shares changed hands through the consortium of Allied Bank Ltd., National Bank Ltd. and Faysal Bank. Mr. Ali Nadeem, Manager of Equity Sales at First National Equities agreed to this notion and added that members of the consortium supposedly off-loaded their previous portfolio in order to facilitate the transaction. However, Ali was quick to add that there is no authentic confirmation as far as the details of the transaction are concerned.

A foreign fund had major holdings in HUBCO and thus a $60 million outflow from foreign investor portfolio investment was recorded in the aftermath of this transaction, Ali confirmed.

After two strong sessions, profit taking was observed in FFC. PPL faced a dip as well, after news of privatisation and this trend is expected to continue until further news. Earlier, the government of Pakistan banned export of petroleum products to Afghanistan, which did not come favourable with PPL.

Banking sector continued to perform inopportunely, in-line with the investor sentiment after banking margins reduced in the aftermath of the new monetary policy. Until something dramatic happens, prices will continue to plunge.

Engro showed some positive movement after two rather dry sessions and Ali stressed that the primary reason for this was the announcement on the division of gas. Prior to this, authorities had declared that gas supply to Engro, Dawood Hercules and Pak-Arab Fertiliser will be closed until further notification.

As for tomorrow, market is expected to remain under pressure, but Ali added that POL’s result could initiate a rally in the petroleum sector.