Stocks plunge 1pc as EAC suggests subsidy cuts, taxes

Stocks plummeted one percent on Friday, falling for the third consecutive session, as tough suggestions given by the Economic Advisory Council (EAC) spread negativity among investors and across the board declines, dealers said.

Analyst Ahsan Mehanti from Arif Habib Securities said, “The pressure remained in scrips across the board on weak earnings outlook amid surge in local power tariff and higher gas tariff. Banking stocks outperformed on higher banking spreads.”

Investors remain concerned over falling foreign exchange reserves data, weak global crude oil prices, dismal on oil and cement sales data for August 2018, unresolved circular debt crises, and foreign outflows, which played a catalytic role in the bearish close, he added.

The EAC deliberated on several chronic issues and it was decided to take tough measures, such as reduction in subsidies and imposition of taxes, which would likely trim the margins of companies.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index fell 1.00 percent or 411.62 points to close at 40,854.77 points.

KSE-30 shares index fell 1.10 percent or 224.22 points to end at 20,098.41 points.

As many as 378 scrips were active today, of which 80 moved up, 283 retreated, and 15 remained unchanged. The ready market volumes stood at 120.864 billion shares, as compared with the turnover of 159.678 billion shares in the previous session.

Analyst Maaz Mulla of JS Global Capital Limited said, “We believe negativity in the market was due to noise on the political front and declining foreign reserves.”

“Moving forward, investors are recommended to trade cautiously and reduce short-term positions on strength due to lack of positive triggers that can potentially drive the market,” he added

Pakistan Petroleum Limited declined by 2.77 percent despite announcing a discovery at Karsal block from Talagang X-1 exploration well. Mari Petroleum was also down by 1.31 percent after the company disclosed that it has signed an agreement with Petroleum Exploration to acquire their entire working interest in block 2768-9 (Sukkur).

The highest gainers were Phillip Morris Pakistan, up Rs118.00 to close at Rs3,598.00/share, and Shield Corporations, up Rs11.85 to finish at Rs248.85/share.

Companies that booked highest losses were Colgate Palmolive, down Rs89.00 to close at Rs2,550.00/share, and Pakistan Tobacco, down Rs54.85 to close at Rs2,395.15/share.

Fauji Cement recorded the highest volumes with a turnover of 13.943 million shares. The scrip gained Rs0.27 to close at Rs24.51/share.

The lowest volumes were witnessed in Unity Foods Limited, recording a turnover of 7.293 million shares; losing Rs1.97 to end at Rs37.49/share.