Stocks flatline as economic indicators continue to flash red

Stocks on Wednesday remained in the red for the third straight day as an unpromising macroeconomic outlook, off-putting expected corporate earnings, and ebbing international crude weighed on the trade big time, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed lower amid institutional profit taking in oil, banking, and cement scrips owing to economic uncertainties.

“Slump in global crude prices, dismal data on current account deficit at $6.1 billion for July-November 2018, and concerns over ongoing foreign outflows catalysed a bearish close,” Mehanti added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.14 percent or 52.66 points to close at 38,063.15 points level. KSE-30 shares index shed 0.25 percent or 44.91 points to end at 18,018.98 points level.

Of 345 active scrips, 115 moved up, 200 retreated, and 30 remained unchanged. The ready market volumes stood at 101.040 billion shares, as compared with the turnover of 90.623 million shares in the previous session.

Adil Ghaffar, CEO at First Equity Modaraba, said under the tough on-the-ground financial conditions and severe pressure from multilateral loan agencies, the present regime was hard-pressed to announce another mini budget within a span of five months. “The government, rather than just increasing tax rates, must bring in venues to broaden its tax base,” Ghaffar said. He said sweeteners offered to direct taxation be increased substantially to attract persons, who were presently in indirect taxation net. “The government's prime objective should be documentation of economy,” he explained. Murtaza Jaffar from Elixir Securities said equities ended marginally negative mainly owing to a selling pressure in energy stocks from a continuous free fall in international oil prices.

Pakistan Oil Fields fell 2.6 percent, Pakistan Petroleum declined 2.58 percent, and Oil and Gas Development Company lost 2.31 percent to become the major laggards.

“We expect market to remain range-bound; however, any positive news flow during the upcoming session from Joint Coordination Committee (JCC) meeting in China, may lift investor sentiments,” Jaffar said. According to an analyst the market may get support around 38,000 points level and few expect that soon the economic fundamentals would be changed and the index was likely to see fresh investment in the New Year.

He added that the market saw some selling pressure but it consolidated on the statement of the finance minister Asad Umar, saying that “financing gap of $12 billion has been met comfortably and the country is set to get assistance from China, UAE and Saudi Arabia”.

However, he further said, a few were taken by surprise over his statement that the government was likely to introduce mini budget in the middle of next month to trim fiscal deficit. The highest gainers were Colgate Palmolive, up Rs89.00 to close at Rs2400.00/share, and Sapphire Textile, up Rs50.04 to finish at Rs1299.89/share. Companies that booked highest losses were Bhanero Textile, down Rs49.32 to close at Rs937.31/share, and Phillip Morris Pakistan, down Rs45.62 to close at Rs3279.38/share.

Engro Polymer recorded the highest volumes with a turnover of 7.731 million shares. The scrip gained Rs0.89 to close at Rs39.18/share.

The lowest volumes were witnessed in K-Electric Limited, recording a turnover of 12.464 billion shares, and losing Rs0.03 to end at Rs5.95/share.