Stocks slip into sleep mode on mini-budget speculations

Stocks on Thursday slipped into sleep mode to end flat as uncertainties, especially on taxation and other economic measures in the second mini-budget, to be presented next week, weighed heavy on trade, dealers said.

Topline Securities in its market review said the market experienced a lack luster session as in anticipation of the mini budget, scheduled for January 23, 2019, investors adopted a wait-and-see approach.

“Moreover, another reason for the investors adherence to caution is the results season that is starting next week,” the brokerage said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.07 percent or 28.05 points to close at 39,243.89 points, whereas KSE-30 shares index followed suit with a low of 0.09 percent or 17.78 points to end at 18,746.72 points.

Of 332 active scrips, 144 moved up, 176 retreated, and 12 remained unchanged. The ready market volumes stood at 104.483 million shares, as compared with the turnover of 92.773 million shares in the previous session.

Salman Ahmad, Director Equity Sales at Aba Ali Habib Securities, said the market recorded substantial declines during the session as all eyes were on the mini budget.

“Another factor which made dents was the two major political parties’ alliance against the government,” Ahmad added.

Murtaza Jaffar from Elixir Securities said market opened red amid dull volumes where index traded under pressure for the most part of the day as investors traded cautiously ahead of mini-budget.

“However activity witnessed improvement in final trading hour as local institutions became selective buyers in energy and selected sideboard stocks,” Jaffar added.

Sheraz Lakhani, from the trading desk of First Equity Modarba, said foreigners were continuously selling due to devaluation and on the fear that International Monetary Fund (IMF) might dictate the government to increase interest rate, resulting in overall depression in the market. An analyst said the market for the two sessions tested some technical barriers, which were broken; however today it tested 39,200 and slipped to 38780 points. “However closing above resistance level hints the market on the last session of the week is expected to perform well with a likely positive close,” the analyst said.

The market also received some depressing vibes from the Fitch Solutions’ statement that: “Rise in benchmark interest rate may slow the growth process and government has to take loans from the IMF to help stem a slide in economy and the domestic currency”.

This resulted in overall slide of nearly 450 points; however, before the closure some buying erupted on the news that Pakistan was expected to receive the first tranche of $1 billion from the UAE by next week.

The highest gainers were Pakistan Tobacco, up Rs98.95 to close at Rs2800.00/share, and Siemens Pakistan, up Rs17.00 to finish at Rs798.00/share.

Companies that booked highest losses were Colgate Palmolive, down Rs100.00 to close at Rs2010.00/share, and Service Industries Limited, down Rs40.73 to close at Rs798.77/share.

TRG Pakistan Limited recorded the highest volumes with a turnover of 9.011 million shares. The scrip gained Rs0.66 to close at Rs24.46/share.

The lowest volumes were witnessed in Bank of Punjab recording a turnover of 10.170 billion shares, whereas the bank’s scrip lost Rs0.14 to end at Rs12.71/share.