Stocks retreat as investors sour on economic outlook

Stocks fell on Wednesday as an uncertainty prevailed over IMF bailout programme after a government’s response to the IMF about Pakistan’s political and domestic affairs, while talks of new taxes in the upcoming budget continued to affect the market sentiment, traders said. The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index closed lower by 341.10 points or 0.82 percent to 41,330.56 points against 41,671.66 points recorded in the last session.

The highest index of the day remained at 41,852.24 points while the lowest level of the day was recorded at 41,265.04 points. Brokerage Arif Habib Ltd said a negative session was observed at the PSX on Wednesday.

“The benchmark KSE-100 index began the day in green, but bulls lost control as the bears triumphed at the end of the day,” it reported. The KSE-100 hit an intraday low following some market chatter with regard to new tax measures in the upcoming budget as investors decided to book profits, according to the brokerage. One analyst said tax authorities were considering imposing a tax on current-year profits only for companies that fail to maintain a minimum payout ratio (expected to be set in the range of 20-40 percent). A flow of that news also affected the market sentiment.

KSE-30 index also decreased by 137.97 points or 0.93 percent to 14,680.07 points compared with 14,818.05 points recorded in the last session. Traded shares dropped by 39 million shares to 158.102 million shares from 197.681 million shares. The trading value decreased to Rs6.167 billion from Rs6.403 billion. Market capital narrowed to Rs6.277 trillion from Rs6.323 trillion. Out of 332 companies active in the session, 87 closed in green, 224 in red and 21 remained unchanged.

Nabeel Haroon, an analyst at Topline Securities, said a range-bound session was observed at the exchange as the index traded between its intraday high of 181 points and intraday low of -407 points.

A major positive contribution to the index came from UBL, DAWH, MCB, EFERT & PIOC, which cumulatively contributed 67 points to the index.

On the other hand, LUCK, SYS, FFC, TRG & OGDC lost value to weigh down on the index by -191 points. The highest increase was recorded in Bhanero Tex. shares, which rose by Rs44.12 to Rs1,200 per share, followed by Khyber Textile, which increased by Rs40.61 to Rs588.50 per share.

A significant decline was noted in Unilever Foods, which fell by Rs901 to Rs22,499 per share, followed by Colgate Palm, which decreased by Rs38.61 to Rs1,506.61 per share. Analyst Ahsan Mehanti at Arif Habib Corp said a pressure had remained at PSX after the government slammed an IMF's extraordinary statement regarding Pakistan's political situation likely to impact talks with the lender.

“Economic uncertainty amid surging circular debt, falling rupee, and concerns about stalled IMF bailout programme played a catalyst role in the bearish close,” he said. Sectors contributing to the performance included technology and communication (-86.6 points), cement (-67.9 points), E&P’s (-51.5 points), chemical (-27.0 points), and fertiliser (-18.9 points).

WorldCall Telecom remained the volume leader with 20.723 million shares which closed lower by 7 paisas to Rs1.18 per share. It was followed by Maple Leaf with 8.728 million shares, which closed higher by 13 paisas to Rs28.17 per share.

Other significant turnover stocks included Fauji Cement, TRG Pak Ltd, Cnergyico PK, TPL Properties, Air Link Commun, D.G.K. Cement, Pak Int. Bulk and Oil & Gas Dev. Shares’ turnover in the future contracts decreased to 43.800 million shares from 44.178 million shares.