Market watch: Stocks fall on political uncertainty, monetary policy
Benchmark KSE-100 index loses 246 points.
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.
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.