Daily Times

Karachi: Bears trumped on Monday, the first day of the trading, at the Pakistan stock market following expressions of the US Administration’s intention to extend its travel ban to Pakistan and rumors of aggressive action by the Securities and Exchange Commission of Pakistan against brokers that were warned recently over compliance issues primarily related to financing. The benchmark KSE 100 Index nosedived by 991 points or 2 percent to close at 48,972 level. The index moved in the range of over 1,500 points.

Stocks opened positive as the Oil & Gas Dev Co led the gains in early trade after the government’s decision to defer a planned 5 percent stake sale, this move possibly pushed investors to cover back positions sold earlier in hopes of squaring lower as part of the deal.

“Stocks plunge sharply lower after global equities reacted to the Trump travel ban. Investors weighed US sanctions on Pakistan on failing to declare defunct banned outfits. Dismal earning announcements in the oil exploration and fertilizer sectors played a catalyst role in late session panic selling at PSX”, observed Ahsan Mehanti, senior analyst.

Besides, there were unconfirmed reports that local investors were selling due to heavily leveraged positions.

On the other hand, the wider market witnessed a steady decline on reports of institutional selling while panic gripped the market around mid-day on rumors of SECP’s action against brokers on non-compliance, said analysts at Elixir Securities.

FFBL registered a top-line decline of 3 percent YoY for 4QCY16 despite an offtake in Urea and DAP which increased by 9 percent and 12 percent YoY, respectively. Pressure on Urea and DAP prices driven by low prevailing prices in the domestic market kept net revenues of the company in check. Resultantly, gross margins dropped to 3 percent in 4Q2016 against 9 percent in 4Q2015.

Further, finance cost doubled compared to the same quarter, last year owing to an increase in long-term borrowings made by the company for financing projects, increased working capital requirement and delay in subsidy receivables. While 23% YoY decline in other income for 4Q2016 resulted in 69% YoY erosion in bottom-line, according to Topline Securities.

Ferozsons Laboratories announced financial results for 2QFY17 reporting consolidated profits of Rs 157 million, EPS Rs 5.21, declining by 79 percent YoY. In 2QFY17, net revenues of the company witnessed a decline of 61 percent YoY, to Rs1.3 billion. The company announced an interim dividend of Rs3 per share.

Atlas Honda announced 3QFY17 financial results, reporting a profit of Rs 1 billion, EPS Rs 9.68, up 32 percent YoY. Net revenues clocked in at Rs 17.2 billion, up 22 percent YoY, replicating a similar growth trend (22 percent YoY) witnessed in sales volumes during the quarter. Gross profit margins stood flat at 10.4 percent. The reported earnings were in line with market consensus.

Exide Pakistan made an announcement of 3QFY17 financial results reporting net earnings of Rs65mn, EPS Rs 8.4. Revenues witnessed a growth of 43 percent YoY in the outgoing quarter, while gross profit margins contracted to 20 percent. Finance costs of the company declined by 82 percent YoY to Rs7.4 million.

Overall, volumes decreased by 35 percent to 389 million shares, while value declined by 20 percent to Rs 20.3 billion/ $241 million. On Friday 597 million shares worth Rs25.4 billion/$241 million were traded at the bourse.

K-electric remained volume leader with 54 million shares traded followed by Aisha Steel Mill 19 million, TRG Pak 17 million, Dost Steel 15 million, Lotte Chemical 14 million, and PIAC 14 million.

On Monday shares of 430 companies were actively traded at the bourse out of which shares of only 84 companies ended in green, 335 in red, while 11 remained unchanged.

Analysts expect that the stocks will open lower today and recommend caution as rumors of SECP crackdown can further dampen mood and push retail investors away in the shorter term. However, institutional led buying is likely to counter fears primarily in index names and sideboards while chartists also eye channel support near current levels.