Stocks drop 2.1pc to 9-month low on economic uncertainty

KARACHI: Stocks dropped by 2.15 percent on Friday, reaching almost nine-month lows, as poor data combined with overall economic and political uncertainty dented investor sentiments, dealers said.

Hamad Aslam, director research of Elixir Securities said, “Onslaught in the market continued as investors remained gloomy due to lack of clarity from the government on how it plans to tackle the balance of payment crisis.”

Harsh statements from IMF on the requirements to significantly depreciate rupee and increase interest rates also dented sentiments, as investors eagerly await announcement of Pakistan’s entry into the IMF program.

During the second half of the day, Shahbaz Sharif’s arrest by NAB added fuel to the fire. Resultantly, the market closed down at 39,226 - lowest level since December 21, 2017.

“We believe selling in the market will continue for now, amidst expected slowdown in GDP growth, decline in real corporate earnings, and increasing returns on competing asset class ie fixed income instruments (due to hikes in interest rates),” he added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index fell 2.15 percent or 860.77 points to close at 39,226.35 points. KSE-30 shares index fell 2.11 percent or 411.27 points to end at 19,077.87 points.

As many as 367 scrips were astir today, of which 43 moved up, 311 retreated, and 13 remained unchanged. The ready market volumes stood at 154.094 billion shares as compared with the turnover of 110.529 billion shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stock fell sharply lower on investor fears amid weekly fall in forex reserves by $627 million and dismal earnings outlook after IMF end of mission statement calls for policy measures on further hike in gas and power tariff and significant external financing.”

Dismal report of Economist Intelligence Unit hinting ongoing currency and inflationary pressures, OGRA notification for up to 143 percent increase in natural gas tariff, and speculations on likely surge in interest rates and rupee depreciation played a catalytic role in the bearish close, he added.

Salman Ahmed head of equity sales at Aba Ali Habib said that economic woes dampened the confidence of the investors, who were worried about the conditions laid down by the IMF to further depreciate the currency and increase benchmark interest rate. The highest gainers were Island Textile, up Rs79.01 to close at Rs1,773.00/share, and Service Industries Limited, up Rs21.21 to finish at Rs721.99/share.

Companies that booked highest losses were Nestle Pakistan, down Rs475.00 to close at Rs9,025.00/share, and Bata Pakistan, down Rs84.00 to close at Rs1,795.00/share. WorldCall Telecom recorded the highest volumes with a turnover of 9.335 million shares. The scrip gained Rs0.04 to close at Rs1.68/share.

The lowest volumes were witnessed in Bank of Punjab, recording a turnover of 8.824 million shares. Its scrip lost Rs0.29 to end at Rs10.97/share.