Stocks fall on fears of downgrade in MSCI review, economic concerns

Stocks on Wednesday finished lower amid fears of a potential reduction of Pakistan’s weight in upcoming MSCI semiannual review, while local macroeconomic concerns and geopolitical uncertainties over US-Iran nuclear deal exit also dampened sentiments, dealers said.

“Moreover, pending disputes over budgetary proposals and prevailing controversy between incumbent government and accountability board is also impacting investors’ sentiment,” Topline Securities said in a market review.

Nauman Khan, head of research at Foundation Securities said President Trump-led US administration’s U-turn on Iran nuclear deal has further tensed the global environment, which was already heating up on the possibility of US China trade war.

“Though it made some intraday recovery towards the later part of the day, the market largely remained red throughout the day,” Khan said adding “It will also push international oil prices, which is not a good omen from dollar-rupee parity, which may also lead to a higher inflation and interest rate environment." However, Khan said, on a broader level the market have corrected 6 percent from its recent top and thus decent buying opportunities have opened up in different sectors.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index shed 0.62 percent or 271.96 points to close at 43,795.00 points, while KSE-30 shares index lost 0.59 percent or 128.10 points to end at 21,468.55 points. As many as 378 scrips were active of which 93 advanced, 267 declined, and 18 remained unchanged.

The ready market volumes stood at 191.850 million shares compared to a turnover of 153.514 million shares a day earlier. “Geopolitical uncertainties amid US withdrawal of Iran nuclear deal, doubts over outcome of unattended tariff, textile package, tax proposals in the federal budget, and privatisation of ailing SOEs, and concerns over circular debt crisis played a catalyst role in bearish close,” said Ahasn Mehanti at Arif Habib Corporation.

Mehanti added that the benchmark index made a high of 44,249 points during the early part of the session, but selling pressure resulted in a jolt and stock market moved down sharply witnessing a session low at 43,386 points. “But slight a recovery was recorded before the end of session on rumors that a positive news regarding capital gains tax issue is likely around the corner,” he said. Saad Hashemy at Topline Securities said the market was down owing to lack of news or want of news, depressing the mood of the investors.

“Further margin calls on leveraged items also dampened sentiments. Investors were sitting on the sidelines because of the economic worries and on upcoming elections,” Hashemy said.

Moreover, he said, increasing uncertainty after recent global developments and subsequent impact in crude oil prices would also keep the market under pressure. Companies with the highest gains included Unilever Foods, up Rs399.01 to close at Rs8,899.00/share and Rafhan Maize, up Rs207.92 to close at Rs8,307.92/share. Companies recording the most losses were Sapphire Textile, down Rs82.52 to close at Rs1,622.94/share and Pakistan Tobacco, down Rs57.00 to close at Rs2000.00/share.

First Dawood Bank, with a turnover of 11.085 million shares, posted the highest volumes. The bank’s scrip gained Rs1 to close at Rs4.01/share followed by Invest Bank with a turnover of 10.411 million shares gaining Rs1 to close at Rs2.76/share.

Sui Southern Gas, with a turnover of 9.26 million shares, posted lowest volumes, falling Rs0.67 to close at Rs33.55/share. It was followed by Unity Foods Limited with a turnover of 7.81 million shares, while it’s scrip shed Rs1.37/share.