Selling pressure in cement stocks and profit hunting in banking scrips forced the stock market here on Friday to close on a negative note, wiping the gains of initial trading. The KSE-100 Index closed at 11511 level, down 19.83 points from previous closing of 11531.
The volume in the ready market amounted to 210 million shares, almost 5 million more than Thursday's trading session. The volume in futures market was 89 million shares, against 102 million shares.
Despite opening on a negative note, the market soon recovered and made an intra-day high of 11624, up 92.8 points. Oil and banking sectors were in the limelight in which Pakistan Oilfields performed well, closing at Rs 441.90, up Rs 5.23. The market was volatile and profit taking was seen in the last trading session, which forced the market to close at a negative point.
Ali Sibtain, research analyst at Elixir Securities, said that on net basis the market was not really doing anything. Hence, to a great extent it was conforming to expectations as it was finally taking a much-needed break before the budget, with an edginess that is tied to the same budget.
Trading was the norm of the day. "Investors should identify fundamentally sound stocks. If there is sufficient discount to their previous trading highs they should take a position and when the scrip finally moves up they should be on the exit side looking instead for other stories on the trading counter that haven't moved.
Even previous highs should be discounted, as this could be a case for the market on a decline. Trading opportunities there plenty abound these days. Scrips like POL, NBP, and other banks have too often provided this type of opportunity.
"Ignorance of some is the key to our market. Since it is merely a change of hands, we need people to be ignorant so we can capitalise on the ignorance.
"One can make a very valid case for a bearish sentiment once the new cement capacity starts to come in place in late June. Prices would be stabilised and some manufacturers may at the beginning lose out market share to those who bring on their capacities earlier ie the likes of Lucky and Pioneer.
"We feel that the one with new capacity in place at the onset may still make a good year of FY07. Cements for now are okay in our view, especially the lead stocks like DGK, Lucky and expansion players like Pioneer' as 26,000 tons of imports hardly matter and one wonders why it is being imported via sea to Port Qasim when the land route may be more feasible from China.
In any case, cements, too, should be traded merely, no long-term positions. Buy at dips and sell when the scrip nears a previous high. Ours remains a trading market for now.'
An analyst from Atlas Capital Market said that the entire cement sector showed weakness throughout the day due to recent circular issued by SBP to allow import subsidy on imported cement. After Thursday's positive trend in banking sector, investors preferred to book profits as prominent scrips went down significantly after gaining values in intra-day movement.
Indus Motors, Honda Atlas and Pak Suzuki closed limit-down, following the news regarding further cut in duty on imports of cars in the forthcoming budget.
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