Market watch: Stocks falter as political uncertainty deepens

Benchmark KSE-100 index drops 388.62 points to settle at 42,878.35

KARACHI:

The Pakistan Stock Exchange endured another volatile trading session on Tuesday, as jittery investors continued to weigh the impact of domestic political turmoil and surging global crude oil and commodity prices.

The benchmark KSE-100 index came under across-the-board selling pressure and ended the day in the negative territory for the second consecutive session.

On the domestic front, the political uncertainty stemming from the no-confidence motion filed by the opposition parties against Prime Minister Imran Khan dented the confidence of market players.

Moreover, the deteriorating value of the rupee against the US dollar, which fell to an all-time low at Rs178.61, sparked concerns of imported inflation and widening of the current account deficit to unsustainable levels, thus creating an atmosphere of fear at the bourse.

Earlier, the trading session kicked off on a dull note as the benchmark KSE-100 index fluctuated in a narrow range. It managed to close the first half in the green.

The second half saw the index recede at a steady pace and it touched an intra-day low of 42,788 points later in the day. However, a brief buying spell in the last hour helped the index recoup some of the losses.

At close, the benchmark KSE-100 index recorded a decrease of 388.62 points, or 0.90%, to settle at 42,878.35 points.

A report of Arif Habib Limited stated that a volatile session was observed at the bourse due to political uncertainty and an overheated commodities’ cycle.

“The market opened in the red zone and stayed under pressure throughout the day,” it said.

The cement sector remained in the negative territory due to the mounting international coal prices.

Sectors contributing to the performance included banks (-86 points), cement (-68 points), exploration and production (-62 points), power (-37 points) and oil marketing companies (-34 points).

Topline Securities, in its report, said that Pakistan equities closed on a negative note, where the benchmark KSE-100 index settled at 42,878 points.

After a sideways opening, the market remained range bound and juggled between ups and downs, it said.

However, the market witnessed selling pressure in the second half of trading as the opposition submitted a no-confidence motion against Prime Minister Imran Khan in the National Assembly. Consequently, the KSE-100 index touched an intra-day low of 478 points.

Major negative contributors were Lucky Cement, Pakistan Petroleum Limited and Hub Power Company, which cumulatively dented the index by 103 points, it said.

On the results front, National Bank of Pakistan announced earnings per share of Rs1.9 for the fourth quarter of 2021, down 7% year-on-year and 46% quarter-on-quarter. It also announced dividend per share of Re1, the report said.

JS Global analyst Mubashir Anis Naviwala stated that the downtrend continued due to political uncertainty and soaring commodity prices, triggering concerns of a major inflationary shock to the economy.

TPL Corporation (-8.7%), Unity Foods (-5.9%), Ghani Global Holdings (-5.2%), TRG Pakistan (-2.6%) and TPL Properties (-7.5%) were the major contributors to the trading volume.

“Going forward, in the light of mounting political uncertainty and risk of external shocks to the economy, we recommend investors to adopt a buy-on-dip strategy in the banking and oil and gas sectors,” the analyst said.

Overall trading volumes dipped to 226.1 million shares compared with Monday’s tally of 236.9 million. The value of shares traded during the day was Rs7.1 billion.

Shares of 343 companies were traded. At the end of the day, 102 stocks closed higher, 223 declined and 18 remained unchanged.

TPL Corporation was the volume leader with 17.4 million shares, losing Re1 to close at Rs10.46. It was followed by Unity Foods with 17.2 million shares, losing Rs1.49 to close at Rs23.64 and Ghani Global Holdings with 16.9 million shares, losing Rs0.87 to close at Rs15.83.

Foreign institutional investors were net sellers of Rs72.8 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.