Market watch: Rising inflation pulls stock market down

Benchmark KSE-100 index sheds 127.15 points to settle at 44,300.95

KARACHI:

Selling pressure persisted at the Pakistan Stock Exchange (PSX) on Friday, which pulled the KSE-100 index down by nearly 130 points as poor economic data weighed on investor sentiment.

Pakistan’s trade deficit widened almost 100% to $3 billion in March 2021 whereas the nine-month (Jul-Mar) trade deficit widened over $20.5 billion, according to figures released by Adviser to Prime Minister on Commerce Abdul Razak Dawood on Thursday.

Moreover, the Pakistan Bureau of Statistics (PBS) reported the same day that inflation rose 9.1% in March – the highest pace in nine months.

Both the ballooning trade deficit and the soaring inflation took a toll on the investment climate.

In the morning, trading began on a bullish note at the stock exchange, however, the momentum could not last long as investors started offloading their holdings, dragging the market down. The market continued to oscillate between the red and green territories throughout the session.

Reports of cement sector posting the highest-ever sales growth of 44% in March 2021 provided support to the market in midday trading. However, the overall weak sentiment pushed the bourse into the negative territory and it closed the day with a modest decline.

At close, the benchmark KSE-100 index recorded a decrease of 127.15 points, or 0.29%, to settle at 44,300.95 points.

JS Global analyst Danish Ladhani said that the KSE-100 index closed at 44,301, down 127 points, after touching intra-day high and low of +181 and -230 points.

Total traded volume for the day was recorded at 267 million shares where top contributors were TRG Pakistan (-2.8%), Pakistan Refinery (+3.6%), Unity Foods (+0.7%), Byco Petroleum (+1.7%) and Ghani Glass Holdings (-1.8%).

Technology and exploration and production sectors shed value due to selling pressure where NetSol (-6.8%), Pakistan Petroleum (-0.8) and Pakistan Oilfields (-1.9%) closed in the red.

“We expect the market to remain volatile ahead amid increasing corona cases, hence, we recommend investors to book profit on the higher side and wait for any sharp dips to accumulate value stocks,” the analyst said.

Overall trading volumes plunged to 266.8 million shares compared with Thursday’s tally of 313.5 million. The value of shares traded during the day was Rs14.4 billion.

Shares of 379 companies were traded. At the end of the day, 157 stocks closed higher, 198 declined and 24 remained unchanged.

TRG Pakistan was the volume leader with 22.9 million shares, losing Rs3.93 to close at Rs136.22. It was followed by Pakistan Refinery with 15.4 million shares, gaining Rs0.9 to close at Rs26.09 and Unity Foods with 14 million shares, gaining Rs0.2 to close at Rs28.95.

Foreign institutional investors were net sellers of Rs280.15 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.