Stocks fall despite IMF loan resumption

Benchmark KSE100 index drops 309.08 points to settle at 42,195.26

KARACHI:

The Pakistan Stock Exchange extended its bearish trend on Tuesday with the benchmark KSE-100 index shedding over 300 points as the market reacted to repercussions of economic and political uncertainty. In the beginning, market players cherished the revival of International Monetary Fund’s (IMF) loan programme as its executive board approved $1.16 billion loan for Pakistan, and lifted the index. In line with that, the rupee appreciated 0.82% against the US dollar in the inter-bank market, which further boosted investor confidence and sparked buying interest.

However, concerns over floods inflicting $10 billion losses across the country dented the positive sentiment and as a result selling pressure was witnessed across the board due to which the KSE-100 index started losing gains. Jittery investors, who feared that inflationary pressure would mount, couldn’t sustain the positive momentum. Profit-taking in the final hours further pulled the index down. Earlier, trading began on a positive note and the KSE-100 index inched up in initial hours.

However, the uptrend could not be sustained and selling pressure emerged towards midday, which pulled the market lower. Profit-taking by investors later in the day further fuelled the bearish sentiment. The KSE-100 index closed the day in the red. At close, the benchmark KSE-100 index recorded a decrease of 309.08 points, or 0.73%, to settle at 42,195.26. Topline Securities, in its report, said that Pakistan equities celebrated the resumption of Extended Fund Facility (EFF) by the IMF board as the KSE-100 index opened up by 486 points. Buying interest was witnessed across the board, which assisted the market to touch an intra-day high at 43,052 (+548 points; or 1.41%).

However, profit-taking kicked in at the aforesaid level, which pushed the index towards intra-day low at 42,106 (-398 points, or 0.94%). The KSE-100 eventually settled at 42,195 (-309 points; or 0.73%), it said. Another highlight of the day was on the macro front where Pakistani rupee gained Rs1.8 (0.82%) against the greenback in inter-bank trading and closed at 220.12. Bank, fertiliser and techsector stocks contributed negatively to the index where Habib Bank, Engro Corporation, TRG Pakistan, Bank AL Habib and MCB Bank lost 136 points cumulatively.

On the flip side, Systems Limited, Dawood Hercules and Service Global Footwear witnessed some buying interest as they added 35 points collectively, Topline added. Arif Habib Limited, in its report, said that the market opened in the positive zone as the International Monetary Fund’s executive board approved the loan facility for Pakistan. However, later in the day, investors opted for profit-taking across the board, which made the index to close in the red. Main board volumes remained decent, although hefty volumes were witnessed in third-tier stocks, it said.

The index closed at 42,195.25 points, down 309.09 points (-0.73%). Sectors contributing to the performance included banks (-96 points), fertiliser (-48.9 points), cement (-34 points), E&P (-31.85 points) and chemicals (-30.5 points). Volumes increased from 229.2 million shares to 237.7 million shares (+3.7%). Average traded value increased by 0.4% to $33.2 million as against $33.1 million, the report added. JS Research analyst Mubashir Anis Naviwala said that the KSE-100 index failed to sustain its intraday high of 43,052 and slid to close at 42,195, down 309 points day-on-day. “Going forward, we recommend investors to avail any downside as an opportunity to buy E&P and bank stocks,” said the analyst.

Overall, trading volumes increased to 237.7 million shares compared with Monday’s tally of 229.2 million. The value of shares traded during the day was Rs7.3 billion. Shares of 338 companies were traded. At the end of the day, 122 stocks closed higher, 189 declined and 27 remained unchanged. K-Electric was the volume leader with 38.2 million shares, losing Rs0.19 to close at Rs3.34. It was followed by WorldCall Telecom with 13.7 million shares, gaining Rs0.01 to close at Rs1.28 and Unity Foods with 12.9 million shares, gaining Rs0.07 to close at Rs22.99. Foreign investors were net buyers of Rs27.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.