Stocks weigh down on rising inflation concerns

Stocks closed lower on Friday as inflation concerns spiked following drastic rupee depreciation against the US dollar following government’s decision to remove cap, traders said.

Pakistan Stock Exchange (PSX) benchmark KSE 100-share Index lost 0.97 percent or 396 points to close at 40,450.53 points against 40,846.53 points recorded in the last session.

Intraday high was 41,095.85 points, while the lowest level of the day was recorded at 40,404.58 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks fell across the board on investor fears for higher inflation amid a plunge in rupee.”

Investor concerns over ongoing forex crises, FX reserves falling to a record low of $3.7 billion and uncertainty over the outcome of Pak-IMF negotiations on programme conditions amid political uncertainty played a catalytic role in the bearish close.

KSE-30 index also decreased by 101.67 points or 0.67 percent to 15,109.93 points compared with 15,211.60 points recorded in the last session.

Volumes dropped by 73 million shares to 191.327 million shares from 364.131 million shares, whereas value decreased to Rs7.119 billion from Rs14.480 billion. Market capital narrowed to Rs6.351 trillion from Rs6.414 trillion. Out of 333 companies active in the session, 76 closed in green, 238 in red and 19 remained unchanged.

Analyst Nabeel Haroon of Topline Securities said the index after increasing 2.67 percent on Thursday, took a breather and largely traded in the negative zone.

A major contribution to the index came from Habib Bank Limited (HBL), Hubco, Engro Polymer and Chemicals Limited (EPCL), Pakistan Oilfields Limited, and Mari Petroleum, as they cumulatively contributed 127 points to the index, on the flip side Systems Limited, Engro, Meezan Bank, Pakistan Petroleum Limited and MCB lost value to weigh the index down 205 points.

The highest increase was recorded in the shares of Mari Petroleum, up Rs12.29 to close at Rs1,450.14/share, followed by Hafiz Limited, up Rs10.39 to close at Rs148.98/share. A significant decline was noted in the shares of Bhanero Tex., down Rs83.24 to end at Rs1,026.76/share, followed by Siemens Pak., down Rs49.71 to end at Rs613.19/share.

Brokerage Arif Habib Ltd said the market opened in the red zone and traded in the same zone with sluggish activity throughout the first trading session owing to the rupee-dollar parity and political instability. “However, after the second session resumed the bears took charge and the index plunged down 440.97 points as investors opted to square up their positions due to the rollover week,” it reported.

Sectors contributing to the performance included cement (-75.4 points), technology and communications (-75.3 points), fertiliser (-73.7 points), banks (-35.4 points), and autos (-30.9 points).

Pak Refinery remained the volume leader with 14.225 million shares. Its scrip decreased by 5 paisas to close at Rs13.61/share. It was followed by Cnergyico PK with 13.167 million shares that closed lower by 13 paisas to stand at Rs3.89/share.

Other stocks that recorded significant turnover included Fauji Foods Ltd, WorldCall Telecom, K-Electric Ltd., Hubco, HBL, EPCL, Maple Leaf and Lotte Chemical.

Shares’ turnover in the future contracts decreased to 175.320 million shares from 199.234 million shares.