Market Watch: Stocks suffer losses on political uncertainty

Benchmark index dips 170.44 points to settle at 33,848.68

KARACHI: Political uncertainty took its toll on the stock market on Wednesday as bears returned and pushed the bourse down by 170 points because of a lack of positive triggers by the end of the session.

Growing political noise, emerging from Pakistan Tehreek-e-Insaf (PTI) allies disapproving of government’s decisions, contributed to the market’s decline.

Balochistan National Party-Mengal’s (BNP-M) leader Akhtar Mengal announced the withdrawal of his party from the alliance with PTI, which increased selling pressure in the market.

The threat to PTI’s ruling alliance sparked fears among market participants, dragging the benchmark index into the red zone. Moreover, rupee’s volatility against the US dollar dented investors’ sentiment.

Earlier, the market opened on a positive note and maintained its gains till midday. However, following withdrawal of BNP-M from the ruling alliance, the bourse dived and extended losses.

At close, the benchmark KSE-100 index recorded a decrease of 170.44 points, or 0.50%, to settle at 33,848.68 points.

Arif Habib Limited, in its report, stated that the market made a strong comeback by registering an increase of 377 points. However, BNP-M’s decision to leave the PTI coalition government caused jitters in the bourse.

The index lost all the gains made during the session and sustained a loss of 243 points. It closed down by 170 points.

It said the political uncertainty amid the Covid-19 health crisis and border skirmishes between China and India dented investor sentiment.

The rupee-dollar parity also crossed Rs165 during the day. However, international crude oil prices picked up pace, which helped exploration and production stocks to post gains, the report added.

The vanaspati sector topped trading volumes with 43.9 million shares changing hands, followed by investment banks (35.5 million) and chemical firms (34.8 million).

Stocks that contributed positively to the index included Nestle (+10 points), Hubco (+10 points), OGDC (+10 points), Searl (+9 points) and Philip Morris (+8 points).

Stocks that contributed negatively were MCB Bank (-42 points), Engro (-26 points), UBL (-25 points), Fauji Fertiliser Company (-17 points) and HBL (-15 points).

JS Global analyst Danish Ladhani said the benchmark KSE-100 index after hitting high and low of +377 points and -243 points respectively, closed at 33,848, down 170 points.

“The market came under pressure before the end of trading due to news of BNP-M’s withdrawal from the alliance with the federal government,” he stated. “Investor interest was mainly seen in sideboard stocks.”

Blue chips such as Engro (-1.3%), Fauji Fertiliser Company (-1%), HBL (-0.9%), MCB (-2.9%), Lucky Cement (-1.1%), UBL (-2.1%) and Pakistan Oilfields (-0.6%) ended down.

“Going forward, we expect the market to remain range bound and recommend investors to sell on strength,” the analyst said.

Overall, trading volumes increased to 340.9 million shares compared with Tuesday’s tally of 217.9 million. The value of shares traded during the day was Rs10.1 billion.

Shares of 379 companies were traded. At the end of the day, 135 stocks closed higher, 219 declined and 25 remained unchanged.

Unity Foods was the volume leader with 43.9 million shares, losing Rs0.97 to close at Rs12.04. It was followed by Jahangir Siddiqui and Company with 28.9 million shares, losing Rs0.07 to close at Rs13.32 and Pakistan Refinery (R) with 13.8 million shares, losing Rs0.19 to close at Rs1.70.

Foreign institutional investors were net sellers of Rs424.4 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.