Stocks decline on economic uncertainty, foreign selling

Stocks on Tuesday failed to maintain Monday’s healthy recovery and declined sharply, with daily turnover reaching almost eight year low and foreign selling once again setting in, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Profit-taking was witnessed amid thin trade at the stock market in the post-earning season on economic uncertainty.”

Rising political noise, foreign outflows, central bank governor’s comments over further economic slowdown on calibrated moderation, uncertainty over rupee parity, and likely hike in power tariff as Pak-IMF deal nears, played a catalytic role in the bearish close, he added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.62 percent or 239.58 points to close at 38,612.37 points level. KSE-30 shares index followed suit with a low of 0.95 percent or 175.60 points to end at 18,240.07 points level.

Of 338 active scrips, 109 moved up, 215 retreated, and 14 remained unchanged. The ready market volumes stood at 70.809 million shares, as compared with the turnover of 99.535 million shares in the previous session.

Madiha Javed, head of research at Ismail Iqbal Securities, said, “The market index remained under pressure throughout the day with volatile exchange rate contributing to the negative sentiment.” News of IMF visit to Pakistan next week also remained on the forefront, but without any details. Commercial banks were the largest contributors to the index declines, followed by cements and power generation and distribution companies, she said.

Activity remained dull with only 71 million shares traded during the session. News related to commencement of test run operations of Engro Powergen Thar Private Limited using local coal with commercial operations targeted to start from June 2019 got some traction, Madiha added.

Several institutions sold their holdings after Monday’s rise of more than 500 points. Foreign selling which showed some positive trend in early part of 2019 once again subsided, and the capital market approximately witnessed more than five million dollars per week for the last six to eight weeks.

The major concerns for the market have been high inflation rate, increase in benchmark interest rate, and upcoming visits of IMF and FATF.

Down turn in the industrial sector, where growth landed in the minus column cast shadows in the minds of traders and analysts. Despite the government’s tall claim that they were taking all steps in the right direction, industrial production went down by 2.3 percent in July to January period, and 4.69 percent in January alone. The fall in production would shrink revenue collection, ultimately widening trade deficit, an economist said.

The highest gainers were Phillip Morris Pakistan, up Rs185.00 to close at Rs3,975.00/share, and Island Textile, up Rs81.80 to finish at Rs1,799.00/share.

Companies that booked highest losses were Sanofi-Aventis, down Rs40.01 to close at Rs815.00 share, and Bata Pakistan, down Rs31.33 to close at Rs1,698.67/share.

Pakistan Elektron recorded the highest volumes with a turnover of 15.629 billion shares. The scrip gained Rs0.74 to close at Rs25.22/share.

The lowest volumes were witnessed in BOP recording a turnover of 6.251 million shares, whereas the bank’s scrip lost Re0.01 to end at Rs13.99/share.