Cautious investors linger on the sidelines over IMF loan uncertainty

Fahad Kazmi April 28, 2010

KARACHI: Stocks ended flat in dull trade on Tuesday as investors stayed on the sidelines in the absence of any positive triggers and uncertainty over an International Monetary Fund (IMF) loan.

The Karachi Stock Exchange’s benchmark 100- share index ended a marginal 0.01 points up at 10,556.38. “Unless there is clarity on the IMF’s fifth tranche or until the budget is announced, investors are likely to be cautious,” said Asad Iqbal, chief investment officer at Faysal Asset Management. The IMF board will likely meet in mid-May to consider the next tranche of Pakistan’s $11.3 billion loan, a source close to talks between IMF officials and Islamabad said last week.

The IMF’s board had originally been scheduled to meet on March 31 to approve the next portion of the emergency package, which was first agreed on in November 2008 to avert a balance of payments crisis and shore up reserves. However, differences over several issues, such as an increase in the power tariff and implementation of a valueadded tax, have delayed approval of the tranche. “Monday’s net foreign inflow of $6.7m and United Bank Limited’s first quarter result helped the market open on a positive note,” said Ahmed Rauf, an analyst at JS Global Capital.

“However, the local bourse witnessed yet another range-bound session, as the corporate results season failed to provide any positive triggers to boost the market,” he added. Trading volume fell 12.3 per cent to 110 million shares compared to Monday’s tally of 125.45 million shares. Second-tier stocks stood as volume leaders while some activity in the oil, cement and banking sectors was also witnessed and as a result the total exchange value stood at Rs 4.15 billion, rising 12 per cent from Monday’s total. During the day’s trade 170 stocks closed higher, 246 stocks declined and 20 stocks remained unchanged in value.

TRG Pakistan (KSE: TRG) was the volume leader for a second day running with 14.7 million shares losing Rs0.66 to close at Rs5.77. Azgard Nine (KSE: ANL) came second with 7.9 million shares gaining Rs0.19 to close at Rs15.56. Lotte Pakistan (KSE: LOTPTA) finished third with 6.6 million shares losing Rs0.22 to close at Rs 11.28. There was a glimmer of hope for the oil and gas sector as Pakistan Petroleum (KSE: PPL) remained the center of investor interest following early morning reports suggesting the company is willing to issue a convertible bond.

That coupled with a better-than expected nine-month earnings result for the current fiscal year helped the stock close 1.9 per cent higher at Rs 200.25. Gharibwal Cement (KSE: GWLC) was Tuesday’s KSE-100 top gainer of the day, its share price rising 7.2 per cent to close at Rs12.35. TRG Pakistan, Tuesday’s volume leader, was also in the losers list dropping a massive 10.3 per cent. Lafarge Pakistan Cement (KSE: LPCL) closed in the red, its share price shedding 4.76 per cent to close at Rs4.