Bourse dips on loan rollover worries

KSE-100 index drops 91.45 points, settles at 77,992.79

KARACHI:

Pakistan Stock Exchange (PSX) registered a modest fall of nearly 100 points on Wednesday amid growing concerns over the poor economic outlook and uncertainty surrounding the rollover of $9 billion worth of loans.

In the morning, the trading day started off on a positive note, with the KSE-100 index reaching its intra-day high of 78,334.60 points. However, the momentum could not be sustained as reports emerged that Pakistan's inclusion in the International Monetary Fund (IMF) board meeting agenda for the Extended Fund Facility (EFF) might be delayed due to an unresolved financing gap along with protests over high taxes and soaring industrial power tariffs.

Despite a mid-session boost from Moody's upgrade of Pakistan's local and foreign currency issuer and senior unsecured debt ratings to Caa2 with a positive outlook, the market remained under pressure. Consequently, the index fell below the 78,000 mark and reached its intra-day low at 77,990.34 points.

The market, while continuing its downward trend from Tuesday, closed with modest losses.

"Stocks closed lower on a weak economic outlook amid reports of uncertainty over $9 billion worth of loan rollovers," said Ahsan Mehanti, Managing Director of Arif Habib Corp.

"Mid-session support came on the back of Moody's upgrade of the government's local and foreign currency issuer and senior unsecured debt ratings to Caa2 and a positive outlook," he said.

"Reports saying Pakistan's inclusion in the IMF board meeting agenda for EFF could be postponed owing to the unresolved gross financing gap and protests over higher taxes and surging industrial power tariffs also played the role of catalysts in bearish close at the PSX."

At the end of trading, the benchmark KSE-100 index posted a small drop of 91.45 points, or 0.12%, and settled at 77,992.79.

Topline Securities, in its report, said "continuing Tuesday's trend, Pakistan equities commenced the day on a negative note."

Bank AL Habib, Highnoon Laboratories, Packages Limited, MCB Bank and Hub Power contributed negatively with a cumulative loss of 104 points. On the flip side, Mari Petroleum, Engro Corporation and Fauji Fertiliser saw some buying interest as they added 162 points, Topline added.

Arif Habib Limited (AHL), in its review, commented that the stock market experienced a "flat session with the KSE-100 hugging 78,000."

In the KSE-100 index, 29 shares rose while 65 fell with Mari Petroleum (+2.67%), Engro Corp (+1.73%) and Fauji Fertiliser (+1.03%) being the biggest contributors to the gains, it said, adding that Bank AL Habib (-0.98%), Highnoon Laboratories (-3.56%) and Packages Limited (-4.79%) were the largest drags.

JS Global analyst Mohammed Waqar Iqbal said that the news of Pakistan's ratings upgrade by Moody's could not restore investor confidence.

"Going forward, we may see a similar trend where any positive development on the economic front, particularly pertaining to approval of the IMF loan programme, could break the ice and spark fresh buying," the analyst added.

Overall trading volumes increased to 636.02 million shares compared with Tuesday's tally of 591.5 million. The value of shares traded during the day was Rs16.3 billion.

Shares of 452 companies were traded. Of these, 140 stocks closed higher, 260 fell and 52 remained unchanged.

Kohinoor Spinning Mills was the volume leader with trading in 124.7 million shares, losing Rs0.13 to close at Rs11.44. It was followed by Fauji Foods with 39.3 million shares, gaining Rs0.39 to close at Rs8.92 and Yousuf Weaving Mills with 34.9 million shares, losing Rs0.27 to close at Rs5.81.

Foreign investors were net buyers of shares worth Rs131.7 million, according to the NCCPL.