Market watch: Stocks falter on policy rate hike

Benchmark KSE-100 index tumbles 489.93 points to settle at 41,950.32

KARACHI:

The Pakistan Stock Exchange witnessed another volatile session on Tuesday, as jittery investors preferred to stay on the sidelines amid a deteriorating political and economic condition in the country.

After spending most of the day in the red, the benchmark KSE-100 index recorded a decrease of around 490 points to settle below the psychological barrier of 42,000 points.

The recent decision of the State Bank of Pakistan (SBP) to increase the benchmark interest rate by 150 basis points to an 11-year high at 13.75% dented the confidence of market players, who were already struggling to find positive cues in the chaotic political and economic situation.

Uncertainty about the resumption of International Monetary Fund (IMF) loan programme amid persistently falling rupee against the US dollar continued to haunt the trading environment at the bourse.

Earlier, the session kicked off with a brief rally as the benchmark index touched an intra-day high of 42,637 points in the initial hours of trading.

From that point onwards, the index began its southward journey as investors struggled to find positive cues. The market touched an intra-day low of 41,916 points later in the day to finally settle in the red zone.

At close, the benchmark KSE-100 index recorded a decline of 489.93 points, or 1.15%, to settle at 41,950.32 points.

Topline Securities, in its report, said that Pakistan equities closed in the red zone, where the benchmark KSE-100 index settled at 41,950.

During the day, the market continued its negative momentum, where the index touched an intra-day low of 524 points.

“Ambiguity about the IMF programme, unstable political conditions and secondary market yields kept investors’ confidence in check,” Topline said.

Major decliners during the day were Systems Limited, United Bank Limited, Fauji Fertiliser Company, Lucky Cement and Hub Power Company. On the flip side, TRG Pakistan, Pakistan Oilfields Limited and Habib Bank Limited closed on a positive note, it added.

A report of Arif Habib Limited stated that the KSE-100 index opened negative and experienced a volatile session throughout the day due to concerns over foreign exchange reserves and rate hike in the monetary policy statement, which dented the confidence of investors.

The market continued to remain under pressure as investors opted to stay on the sidelines until further clarity emerged on the political as well as economic front, the report said.

Volumes remained dry throughout the main board whereas healthy volumes were observed in third-tier stocks.

Sectors contributing to the performance included banks (-108.8 points), technology (-74.8 points), cement (-72.1 points), fertiliser (-56.2 points) and chemical (-25 points), the AHL report added.

JS Global analyst Mubashir Anis Naviwala said that the downtrend continued as the bourse shed 490 points and closed at 41,950.

“We believe the current political situation and uncertainty about the resumption of IMF programme continued to shatter investors’ confidence,” the analyst said.

The market traded between a high and low of 42,637 and 41,916 points.

Major contributors to the total volume were Pakistan Refinery (+3%), Silkbank Limited (+5.3%), TPL Properties (+2.5%), Ghani Global Holdings (-0.8%) and Cnergyico PK (+0.2%).

“Going forward, we recommend investors to remain cautious at current levels,” he added.

Overall trading volumes increased to 169.7 million shares compared with Monday’s tally of 118.99 million. The value of shares traded during the day was Rs5.5 billion.

Shares of 318 companies were traded. At the end of the day, 94 stocks closed higher, 208 declined and 16 remained unchanged.

Pakistan Refinery was the volume leader with 15.7 million shares, gaining Rs0.46 to close at Rs15.74. It was followed by Silkbank Limited with 14.7 million shares, gaining Rs0.07 to close at Rs1.39 and TPL Properties with 10.6 million shares, gaining Rs0.38 to close at Rs15.49.

Foreign institutional investors were net sellers of Rs102.7 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.