Stocks end flat on hawkish fears as growth outlook ebbs

Stocks on Wednesday moved sideways to end two-dimensional amid tepid trade, ahead of monetary policy announcement the tone of which is going to decide the fate of new investment and where the country stands in its future dealings with the International Monetary Fund (IMF), dealers said.

Topline Securities in its daily market review said the benchmark index experienced a dull session and remained relatively unchanged.

“With the monetary policy statement due Thursday, we attribute this [flat close] to investors adopting a wait-and-see approach,” the brokerage said.

Moreover, the brokerage added that they believe the players also remained cautious owing to the results season.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.04 percent or 17.27 points to close at 40,607.12 points level. KSE-30 shares index followed suit with a low of 0.15 percent or 30.10 points to end at 19,501.12 points level. Of 360 active scrips, 143 moved up, 186 retreated, and 31 remained unchanged.

Investors preferred to remain on the sidelines today as traded volumes declined by 19 percent to 125 million, while traded value decreased 28 percent to Rs5 billion.

Salman Ahmad, director institutional sales at Aba Ali Habib said the market was depressed over the confusion prevailing over the central bank’s stance in the the monetary policy.

“The market was abuzz that interest rate might go up by one percent or 50 basis points,” Ahmad said.

However, he said, if the rate remained unchanged then it would be good for the market and hinted that Pakistan declining IMF’s harsh conditions would not take any [tough] decision.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed flat on uncertainty over State Bank of Pakistan’s (SBP) policy rate announcement.

Mehanti said cement and oil stocks outperformed as investors weighed upbeat cement dispatch data for July-Decenber 2018, while surging global oil prices also helped.

Investor concerns over economic outcome of concessions in the mini-budget for energy sector amid Rs1.6 trillion pending circular debt and ongoing political noise led to a negative close at the PSX, Mehanti added.

According to an analyst another factor for slower movement at the bourse was the conflicting news flashes on electronic media that parleys between government and IMF did not fare well.

The analyst attributed this to the multilateral lender’s demanding further increase in interest rate, dissatisfaction with the rupee/dollar parity, and calls for boosting tax collection to Rs4700 billion.

It is going to be tough for the country as the central bank in its first quarterly report has revised the economic growth target down under 5 percent, which showed that industrial cycle has slowed down and tax collection would be trimmed.

The highest gainers were Nestle Pakistan, up Rs400.00 to close at Rs8600.00/share, and Bata Pakistan, up Rs20.00 to finish at Rs1600.00/share.

Companies that booked highest losses were Unilever Foods, down Rs25.00 to close at Rs6975.00/share, and Pakistan Tobacco, down Rs23.68 to close at Rs2757.59/share. Dewan Cement recorded the highest volumes with a turnover of 6.599 million shares. The scrip gained Rs1 to close at Rs14.87/share.

The lowest volumes were witnessed in Fauji Foods Limited recording a turnover of 10.308 billion shares, whereas the scrip los Rs0.19 to end at Rs33.51/share.