Index recovers on account of OGDC to post minor losses

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Triple digit decline during early trade following regional and international trend was well countered singly through low volume strength in OGDC, thereby allowing the index to re-enter positive zone from deep red, while accumulation in various frontline stocks on dips along with high volumes in penny stocks and group specific mid-tier stocks made substantial contribution to the turnover. Extended holding period for MTS borrowers due to Eid holidays along with volatile and uncertain political and economic environment did restrict even the resident participants from making fresh bets, mainly on strength, thus leading to prolonged stagnation.
After initial trading hours, approval by the cabinet of giving MFN status to India invited vibrations in the beneficiaries, mainly the cement stocks, despite the fact that approval from the parliament might be a tough ask. The KSE 100 index closed at 11746.09 levels with the loss of 16.63 points, while KSE 30 index lost 77.72 points to close at 11056.10 levels. All Share index closed at 8135.62 levels after losing 10.26 points. Total 105 scrips advanced 115 declined and 93 remain unchanged out of total 313 scrips traded.
Declining volumes with increasing values that has become a trend mainly due to massive decline in number of participants (thanks to conservative method of CGT), prolonged stagnation will therefore continue to pose a threat mainly on high priced stocks struggling to find sustainable multiples and facing liquidity crunch due to circular debt. Government’s check on rate increase along with high and expensive debt will find the price erosion cyclone hard to resist, however stocks away from the mentioned threats will continue to offer consistent dividend yields along with reporting growth which can be looked for accumulation on dips.
Syndicated activity in various speculative or high price stocks, mainly those under threat can be looked for off-loading/short selling on low volume strength, while materialisation of commitment made for resolving circular debt and that of CGT review may disallow the expected low volume price erosion session, said Hasnain Asghar Ali at Aziz Fidahusein.

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