Stocks flatline as late profit-taking weighs

• Widening five-year credit default swaps dismay investors.
• Cautions prevailed whole day owing to political noise.
• Investors await buying triggers to reenter the market.

KARACHI: Stocks flatlined Tuesday weighed by late profit-taking with investors hanging tight in their safety zones amid elusive buying stimuli, blaring political noise, and a dry foreign funding front, traders said.

The Pakistan Stock Exchange’s premier index KSE-100 Share Index shed 53.98 points or 0.13% to close at 42,796.85 after hitting an intraday low of 42,748.71 and a high of 43,035.78 points.

Darson Research in a report released immediately after the closing bell said investors remained cautious as Pakistan’s five-year credit default swaps widened to 64.19% as default risks surged.

“While lack of progress on next International Monetary Fund (IMF) review and absence of upbeat triggers also dented sentiment,” the brokerage added.

Analysts also said the rupee's once again getting caught in a downward spiral does not bode well for the country's capital market investors.

Topline Securities in a note said equities ended a tad lower, while range-bound activity prevailed at the bourse, despite a decline in international oil prices.

“Exploration and production sector was in limelight. Pakistan Petroleum and Oil and Gas Development Company closed higher as the former in their analyst briefing discussed their international operations, the block in Abu Dhabi has several known discoveries and the company expects to drill the first well next year,” the brokerage said.

Traded volume and value for the day stood at 188.62 million shares, up 1%, and Rs7.41 billion, up 23%, day-on-day respectively. Lotte Chemical was the volume leader with 17.83 million shares.

Arif Habib Limited said the market opened in the red zone on account of political uncertainty, but later in the day, it bounced back.

“Profit-taking in the final hour dragged the index down amid low participation. On the contrary, 3rd tier stocks topped the volume charts,” the brokerage said.

Sectors contributing to the negative performance included technology and communication (-58.6 points), miscellaneous (-24.6 points), power generation and distribution (-16.8 points), cement (-16 points), and vanaspati and allied industries (-10.1 points).

Stocks that contributed significantly to the volumes were Lotte Chemical, WorldCall Telecom Limited, TRG Pakistan, Unity Foods, and TPL Properties Limited.

JS Research recommended investors recommend investors avail downside as an opportunity to buy in the banking and energy sectors.