Market watch: Stocks fall on political uncertainty, monetary policy

Benchmark KSE-100 index loses 246 points.


Our Correspondent May 06, 2014
At the end of the day, 85 stocks closed higher, 235 declined while 21 remained unchanged. PHOTO: PPI/FILE

KARACHI: Bears continued to prowl the stock market on Tuesday because of concerns over the country’s political situation and speculation over the monetary stance of the central bank.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 0.86% or 246.43 points to end at 28,383.20.

According to Muhammad Sibtain Mustafa of Elixir Securities, equities continued to lose momentum with the index closing in the red as political uncertainty took its toll on market performance amid low volumes.



News reports that Pakistan State Oil (PSO -1.8%) may default on payments to international suppliers further dampened any hopes of recovery, he said. However, independent power producers (IPPs) such as Hub Power Company (HUBC +1.3%) and Nishat Power (NPL +3.4%) stood firm as hopes of a shift from oil to coal and policy guidelines from the government in coming weeks brought in institutional interest.

“Overall, lack of institutional interest and low participation led to declines with chartists now calling for further drop in coming days,” Mustafa said.

“Budget-related fears, political hiccups and drying interest will keep the index within a range,” he said. “However, we do not rule out a pre-budget rally as news doing the rounds about industry-specific incentives could likely trigger excitement.”

According to JS Global analyst Ovais Ahsan, United Bank Limited (UBL -2.1%) and Pakistan Petroleum Limited (PPL -1.2%) were the major losers as participants chose to be cautious in the wake of major protests by certain political parties planned for May 11 against alleged rigging in polls last year.

“Other reasons for the bearish mood included circular debt rising above Rs300 billion and electricity shortage peaking in the face of major technical faults at Chashma Nuclear Power Plant and three other plants across the country,” said Ahsan.



He expected the market players to remain cautious ahead of key events this month including the monetary policy announcement. “This is why we recommend a ‘sell on strength’ strategy and a shift to high dividend-yielding plays,” Ahsan said.

Shares of 341 companies were traded on Tuesday. At the end of the day, 85 stocks closed higher, 235 declined while 21 remained unchanged. The value of shares traded was Rs5.2 billion.

Summit Bank was the volume leader with 13.3 million shares, losing Rs0.03 to finish at Rs4.38. It was followed by Soneri Bank with 10.7 million shares, gaining Rs0.40 to close at Rs2.58 and Silkbank with 8.2 million shares, declining Rs0.01 to close at Rs2.58.

Foreign institutional investors were net sellers of Rs54 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, May 7th, 2014.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

COMMENTS (1)

butt | 9 years ago | Reply

Worldcall Telecom Major Triggers Ahead: 1- Worldcall telecom recently hired Marketing Executives in Lahore and Karachi in the quest of enhancing Market share in its Strongest areas of past. That is a visible move toward topline growth

2-Worldcall signed with Walter Pakistan to Handle Communication and Marketing campaign, a visible move toward topline growth 3-The parent company Omantel currently owned by government has successfully divest its 19% stake for fund raising from public With the intention of 'Sharing Opportunities & Spreading Ownership". This translates an addition of 204million Omani Riyal or 530m USD Capital to Omantel's pocket giving it an opportunity to re-structure or expand, thanks to Sultanate People. Though Govt claims it to use the capital for Infrastructure projects or public health programs but and Although its too early to predict but possibly some good news for Worldcall in the form of liquidity injection From the Parents may come in future 4-WorldCall 1Q14 results ended in net profit, though declined topline revenue, but better other income gave an overall encouraging value 5-Public liking of Worldcall as a technology supplier is still Alive its Peers (as word of mouth in Lahore in Karachi) 6-WorldCall telecom is still in list of Meezan's Shariah Complaint Index, and it trading quite lower to its Book value, that mean if by some reasons Omantel wants to dispose off, its enerprise value should be somewhat better 7-WorldCall was purchased by Omantel in 2008 at a price of nearly 25PKR per share, and its Omantel's biggest investmet outside, what does that means; company has lost 90% of its principle and now Omantel must be Hungary enough make profit out of it. 8- Worldcall recently got 35m dollars loan from Pakistani Banks on gaurantee of the Parent company, The management has started to use this lifeline for expansion and restructuring. 9-Advent of 3G means more Mobile internet users on roads and more Broadband users in homes, Offices. Can be positive for Worldcall as well

All this research from internet and company reports; To the Best of My knowledge; Please verify each point yourself before any investment decision. Current rate is quite feasible that what I think.

Invest wisely. Best of Luck

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ