Stocks slip over rising political uncertainty
A sign of the Pakistan Stock Exchange is seen on its building in Karachi, Pakistan January 11, 2016. PHOTO: REUTERS
Pakistan Stock Exchange (PSX) lost some ground on Friday over growing political uncertainty following the arrest of three retired army officers in connection with the court martial of ex-ISI chief General (Retd) Faiz Hameed.
Many investors refrained from building positions also because of uncertainty regarding the fate of independent power producers (IPPs) and possible shortfall in tax collection.
In addition, a potential reduction in the Public Sector Development Programme (PSDP), surge in government debt to nearly Rs85 trillion and 3.1% drop in textile exports dented market sentiment
In the morning, trading commenced on a positive note and the KSE-100 gradually rose with continuous fluctuations by the end of first session at midday.
After the break, the index rose to the intra-day high of 78,619.18 as investors bought stocks in banking, power, cement and automobile sectors.
However, the market lost momentum and started falling rapidly, reaching its intra-day low of 78,041.08 points. Before close, the index recouped some of the losses and ended trading with a slight decline.
"Stocks closed lower amid growing political uncertainty," said Ahsan Mehanti, MD of Arif Habib Corp. "Uncertainty about IMF's approval of IPPs' closure, shortfall in tax collection, potential reduction in the PSDP, surge in government debt to Rs85 trillion and 3.1% drop in textile exports for July contributed to the bearish close at the PSX."
At the end of trading, the benchmark KSE-100 index posted a thin loss of 60.67 points, or 0.08%, and settled at 78,045.31.
Topline Securities, in its report, mentioned that the KSE-100 index largely traded in the positive zone, however, some pressure was observed in latter hours as investors came to book profit. The index settled at 78,045, down 0.08%.
Major positive contribution to the index came from Unilever Pakistan Foods, Hoechst Pakistan, Pakistan Engineering Company, Ismail Industries and Nestle Pakistan, as they cumulatively contributed 534 points.
On the other hand, Sapphire Textile Mills, Exide Pakistan, Khyber Textile Mills, Sazgar Engineering and Reliance Cotton Spinning Mills pulled the index down by 330 points, Topline stated.
Arif Habib Limited (AHL), in its report, observed that "stickiness" around 78k continued the entire week with the KSE-100 remaining range bound between 78k and 79k. It contracted 0.62% week-on-week.
Some 46 shares rose and 53 fell on Friday, with Meezan Bank (+2.78%), Hub Power (+1.08%) and Lucky Cement (+1.96%) contributing the most to index gains, while United Bank (-1.54%), Millat Tractors (-2.14%) and Engro Fertilisers (-0.95%) were the largest drags.
The cement sector was a key mover where nearly all names closed sharply higher. With the index hugging support, cement stocks must play a key role next week to drive the market higher, it said.
"The sector has experienced significant declines of 10% to 20% from its highs earlier this year. If the market is to build on support, cement names will need to lead performance," AHL added.
Overall trading volumes increased to 600.7 million shares compared with Thursday's tally of 591.1 million. The value of shares traded during the day was Rs21.1 billion.
Shares of 440 companies were traded. Of these, 170 stocks closed higher, 220 fell and 50 remained unchanged.
Kohinoor Spinning was the volume leader with trading in 109.5 million shares, gaining Rs0.96 to close at Rs10.28. It was followed by Yousuf Weaving Mills with 70.1 million shares, gaining Rs0.38 to close at Rs6.87 and Pakistan Telecommunication Company with 21.2 million shares, losing Rs0.15 to close at Rs12.42.
Foreign investors were net buyers of shares worth Rs1.26 billion, according to the NCCPL.