Stocks end down as doubt on MSCI EM exclusion persists

KARACHI: Stocks closed flat on Tuesday following a volatile session, as early gains on hopes of tax relief were cut short and uncertainty on MSCI Emerging Market Index turned the index negative, dealers said.

Shumaila Badar, head of research at Ismail Iqbal Securities said the market recovered during the early part of the session due to positive expectations from PSX delegation’s meetings with the government.

However, the benchmark KSE-100 index was unable to sustain the gains due to economic headwinds. Further, worries related to the upcoming MSCI EM index review continued as United Bank, Habib Bank, and Lucky Cement emerged as the biggest contributors to the index’s losses.

“We continue to expect the market to remain range-bound,” she added.

Pakistan Stock Exchange (PSX) KSE-100 shares index lost 0.28 percent or 104.19 points to close at 36,663.38 points level. KSE-30 shares index followed suit with a decline of 0.76 percent or 135.14 points to end at 17,711.31 points level.

As many as 375 scrips were active in today’s session, of those 167 moved up, 190 retreated, and 18 remained unchanged. The ready market volumes stood at 181.729 billion shares, as compared with the turnover of 165.515 billion shares in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks closed lower on economic uncertainty, vagueness over IMF conditions for bailout package, likely raise in power tariff and interest rates, and further rupee depreciation.

“Uncertainty over corporate earnings outlook at PSX played a catalytic role in the bearish close,” he added.

Since October 1, 2018, the market has lost more than 4,200 points, where billions of rupees evaporated.

Topline Securities in its post-market note said that during the early hours of trade, investors were hoping for some relief on transactions. “Early positivity was due to news that government might reduce taxes on stock transactions, but that was short-lived, as the uncertainty on MSCI index kept investor sentiment in check.”

Minister for Information and Broadcasting Fawad Chaudhry has said that the government has decided to carry out an audit of power plants established by the previous government to fix responsibility of “wrongdoings” in them. However, the decision to raise electricity has been deferred for a week.

The minister said the government was giving huge subsidy on electricity, as the cost of the electricity stood around Rs15.53 per unit, while it was being sold at Rs11.71 per unit.

The highest gainers were Colgate Palmolive, up Rs100.00 to close at Rs2,400.00/share, and Island Textile, up Rs57.06 to finish at Rs1,709.00/share.

Companies that booked highest losses were Rafhan Maize, down Rs299.00 to close at Rs7,000.00/share, and Jubilee Life Insurance, down Rs27.00 to close at Rs521.00/share.

Bank of Punjab recorded the highest volumes with a turnover of 12.157 million shares. The scrip gained Rs0.58 to close at Rs10.56/share.

The lowest volumes were witnessed in World-Call Telecom, recording a turnover of 36.080 million shares, and losing Rs0.07 to end at Rs1.53/share.