Stocks fall as IMF noise, UAE silence weigh heavy

Stocks on Monday got off to a depressing start to the week, mostly weighed down by tidings that International Monetary Fund (IMF) is going make the country bent over backwards with its cumbersome terms, which if approved would dent equities’ values and accelerate foreign selling, dealers said.

Topline Securities in its daily market review said negative sentiments persisted throughout the trading session, as reports that the IMF, as part of its bailout package, is demanding of the government to increase discount rates to double digits, allow further devaluation of rupee against the greenback, and increase General Sales Tax (GST) rates, leaving investors reeling.

“Moreover, no update on any immediate financial assistance from United Arab Emirates (UAE) further hurt investors’ sentiments,” the brokerage said. Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.74 percent or 307.98 points to close at 41,352.77 points, while KSE-30 shares index followed suit shedding 0.85 percent or 169.44 points to end at 19,789.94 points.

Of 361 active scrips, 142 advanced, 204 retreated, and 15 remained unchanged. The ready market volumes stood at 176.441 billion shares, as compared to a turnover of 201.540 billion shares in the previous session.

Adil Ghaffar, chief executive officer of First Equity Modaraba said the aftermath of premier and his team's visit to UAE controlled the session at the stock market and index was in red almost the entire day.

“This was the second day of his visit to the UAE without any conclusion on the soft term loans, be in cash or in kind. With a flat face and arrogance, for homegrown politics, nothing could be achieved. Flexibility with hard work and determination will drive through these hard times for economics,” Ghaffar added.

The government should now concentrate on its own ability to consummate the deal with the IMF. Though, IMF lately showed “death to get fever accepted, few more meetings with numbers, reflecting achievements, will definitely filter harsh conditions. Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bearish as investors were waiting for the government announcements on immediate financial assistance from UAE. “Earlier reports of MSCI exclusion of Pakistan blue chip stocks, IMF tougher conditions amid likely $15 billion bailout package and fate of central bank’s policy rate impacted the sentiments,” Mehanti said.

Weak global equities, foreign outflows and concerns for ongoing rupee depreciation led to a bearish close at the PSX, Mehanti added. Moreover another factor, which sent negative signals to investors, was the depressed crude oil price, which resulted in trimming share values at the oil and gas exploring sector.

Textile companies’ shares were also on the losing side because they were anxiously waiting for the government notification about the gas price cut. The highest gainers were ICI Pakistan, up Rs15.00 to close at Rs675.00/share, and Shezan International, up Rs11.68 to finish at Rs479.98/share.

Companies that booked highest losses were Colgate Palmolive, down Rs115.00 to close at Rs2409.99/share, and Khyber Tobacco, down Rs15.85 to close at Rs490.50/share. Lotte Chemical recorded the highest volumes with a turnover of 18.786 million shares. The scrip gained Rs0.01 to close at Rs19.96/share. The lowest volumes were witnessed in Pakistan Elektron, recording a turnover of 8.028 million shares, and losing Rs0.45 to end at Rs32.41/share.