Stocks tread water as IMF terms feared to weigh heavier than ever

Stocks on Monday finished flat on late profit-taking after a volatile trade amid fears that International Monetary Fund (IMF) is likely to tie its rescue package to aggressive tax-base broadening measures and big slashes in energy subsidies that would raise power/gas prices to agonising levels, dealers said.

Topline Securities in a report said investors were bracing for tough budgetary measures that could possibly be dictated by the IMF to bring the economy back on track. “Stocks which managed to beat market estimates in ongoing result season topped volume leaders’ chart today,” the brokerage said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.28 percent or 104.36 points to close at 37,026.27 points level, whereas KSE-30 followed suit with a low of 0.6 percent or 106.67 points to end at 17,564.22 points.

Of 352 active scrips, 183 moved up, 150 retreated, and 19 remained unchanged. The ready market volumes stood at 177.455 million shares against the turnover of 143.894 million in the previous session.

Ahsan Mehanti from Arif Habib Corporation said stocks closed lower amid pressure in selected scrips across the board on global equities selloff.

“Economic uncertainty, concerns over delays in proposed tax amnesty plan, uncertainty over terms of IMF bailout package, and pre-budget concerns contributed to lackluster finish,” Mehanti added.

Madiha Javed, head of research at Ismail Iqbal Securities said the market remained volatile throughout the session due to concerns over the IMF conditions for a bailout package.

“E&Ps, fertilisers and power were the top draggers cumulatively shedding 152.16 points,” Madiha added.

Moreover, the market men are eagle-eyeing the IMF negotiations with Pakistan. The finalisation of an IMF loan package and conditions would dictate the market in the near terms, while some profit-taking is also expected down the line as it was also witnessed on Monday’s final hour, which squeezed the early gains.

The market opened positive and made a high of 37,437 points on hopes that agreement signed in China might trigger exports from Pakistan to the Asian giant. This development renewed buying in some selected stocks from the textile and food group.

However, some analysts reckoned that the development related to the IMF had been a positive one as the team has arrived there was yet no clarity on the terms and conditions.

The general consensus has been that the conditions would force the country to increase revenue collection to reduce volume of fiscal deficit, which was likely to reach 8 percent of the GDP during the current fiscal year.

The additional taxes and reduction on subsidies from the energy group would force the government to revise the electricity and gas tariff upward.

The highest gainers were Phillip Morris Pakistan, up Rs154 to close at Rs3348/share, and Pakistan Tobacco, up Rs32.40 to finish at Rs2604.90/share.

Companies that booked highest losses were Nestle Pakistan, down Rs40.33 to close at Rs7630.00/share, and Sanofi-Aventis, down Rs40.00 to close at Rs794.00/share.

Pakistan International Bulk recorded the highest volumes with a turnover of 14.524 million shares. The scrip gained Rs0.96 to close at Rs10.38/share.

The lowest volumes were witnessed in Bank of Punjab, recording a turnover of 10.466 million shares, whereas the scrip lost Rs0.1 to end at Rs12.61/share.