Stocks languish in listless trade as monetary tightening looms

Stocks on Wednesday wound up flat in yet another mixed session, disregarding reports of inflows from United Arab Emirates (UAE) as speculations of further monetary tightening to tame a wild inflation rate forced investors to stay within the safety of the sidelines, dealers said.

Madiha Javed head of research at Ismail Iqbal Securities said the market started on a positive note given news of arrival of $1 billion from UAE and improved trade deficit numbers for February 2019, but lost momentum to end tad higher than yesterday's closing.

“Autos continued to decline on the third consecutive day after weak auto monthly,” sales Madiha added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.08 percent or 32.44 points to close at 38,928.93 points level, whereas KSE-30 shares index followed suit with a high of 0.09 percent or 15.84 points to end at 18,520.79 points level.

Of 335 active scrips, 144 moved up, 165 retreated, and 26 remained unchanged. The ready market volumes stood at 93.538 million shares, as compared with the turnover of 89.732 million shares in the previous session. An analyst from Arif Habib Limited said investors took little interest and focus apparently shifted towards Interloop’s book building.

“Anticipation of an increase in gas price (as allowed by finance minister) and a likely interest rate hike also concerned investors, which is likely to have negative impact on cost of doing business,” the analyst said. He added that cement, steel, and E&P sectors largely saw selling pressure, whereas fertiliser sector remained unscathed, relatively.

Another analyst said among other factors which depressed the market movers also was the ever rising trade deficit.

He said the general tendency in the local stock market was cautious and domestic financial institutions and some of the key players of the market stayed away from the rings. Fitch Solutions report also cast dark shadows over the investors’ mood as it says that tightening of the monetary policy would slower the overall growth of the economy and would be around one percent lower compared with last fiscal year trend of 5.4 percent.

According to a recently published research, the economy is likely undergo a period of painful readjustment over the near term as Fitch Solutions expects both monetary and fiscal policy to be tightened to address many of the economic imbalances that have built up in recent years.

These imbalances include rising inflation, a widening fiscal deficit and falling foreign exchange reserves.

Topline Securities in its daily market review said the benchmark index yet again experienced a dull trading session today. “Auto sector remained under pressure on back of recent increase in their upper model prices following changes in economic reform package. As a result Indus Motors and Honda Atlas Cars both lost 1-3 percent respectively,” the brokerage said. The highest gainers were Phillip Morris Pakistan, up Rs170.25 to close at Rs3590.94/share, and Indus Textile, up Rs46.50 to finish at Rs1735.00/share.

Companies that booked highest losses were Bata Pakistan, down Rs89.76 to close at Rs1705.44/share, and Shezan International down Rs22.65 to close at Rs441.00/share. The Bank of Punjab recorded the highest volumes with a turnover of 23.727 billion shares. The scrip gained Rs0.26 to close at Rs14.41/share. The lowest volumes were witnessed in Lotte Chemical recording a turnover of 2.348 million shares, whereas the scrip lost Rs0.23 to end at Rs14.65/share.