Stocks lose near a percent as gas tariff hike weighs

Stocks lost near one percent on Monday after government jacked natural gas prices up to 20 percent, panicking mini-budget-wary investors into selling amid thin trade as this development is feared to deal a blow to the profits of the companies that consume gas commercially, dealers said.

The decision, according to Petroleum Minister Chaudhry Sarwar in effect slashes consumer subsidies that he said were a fiscal drag on the government’s budget. The move is said to help ease part of the Rs152 billion deficit for Sui Northern and Sui Southern that are bleeding cash and subsidising consumers and industries.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks fell across the board amid thin trade on investor concerns over Economic Coordination Committee (ECC) decision to raise local gas tariff, which was likely to weaken corporate earnings outlook.

“Uncertainty over revised finance bill announcements, government plans for major cut in PSDP (Public Sector Development Program), unresolved circular debt crises, and concerns over ongoing foreign outflows contributed to a bearish close at the apex bourse,” Mehanti added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index fell 0.98 percent or 399.84 points to close at 40,520.47 points, while its KSE-30 shares index dropped 1.15 percent or 229.77 points to end at 19,793.78 points.

Of 358 scrips, active astir today, 68 moved up, 265 retreated, and 25 remained unchanged. The ready market volumes stood at 145.200 billion shares as compared to the turnover of 156.759 billion shares in the previous session.

Shumaila Badar, head of research at Ismail Iqbal Securities said the market was negative right from the start of the session and then became even more bearish after news that the ECC had approved a hike in gas tariffs. She added that companies like Lucky Cement and DG Khan Cement, being negatively affected by gas tariff hike, were among the top contributors to the index's declines, while another top contributor was Dawood Hercules as it announced that it was no longer considering acquiring a, Edotco Pakistan, a telecommunications tower company. “A mini-budget may possibly be presented before the Parliament tomorrow, which will affect the market in the coming days,” Badar said.

Salman Ahmad, head of equity sales at Aba Ali Habib Securities, said market recorded declines owing to upcoming mini-budget-related uncertainties. "Investors remained sidelined and rather resorted to selling wondering as to what kind of measures Finance Minister Asad Umar will reveal on Tuesday and whether or not they would be harsh on the business, which created doubts,” Ahmad said.

He further said several investors had pinned hopes on Sunday’s meeting with Prime Minister Imran Khan, but the session turned out to be listless and rather it was heard that time was needed to keep things on right footing. “A road map about economy has yet not been cleared yet,” Ahmad said.

The highest gainers were Indus Motor Company, up Rs22.54 to close at Rs1500.62/share, and Bata Pakistan, up Rs9.99 to finish at Rs1839.99/share.

Companies that booked highest losses were Colgate Palmolive, down Rs124.10 to close at Rs2357.90/share, and Ghandhara Industries, down Rs34.90 to close at Rs663.16/share.

Pakistan Suzuki Motors Company Limited recorded the highest volumes with a turnover of Rs34,400 shares. The scrip gained Rs6.21 to close at Rs275.19/share.

The lowest volumes were witnessed in Lotte Chemical, recording a turnover of 23.728 million shares, the scrip lost Rs0.23 to end at Rs14.21/share.