Stocks flat on profit-taking as economic outlook remains cloudy

Stocks on Wednesday fell back to end flat on profit-taking as investors mostly remained on tenterhooks of hawkish monetary policy outlook, macroeconomic alarms, and International Monetary Fund (IMF) bailout fog, dealers said.

Topline Securities, a brokerage, said equities remained range-bound in a dull session owing to absence of any positive developments.

“Such triggers might arise from loan agreement with IMF, receipt of dollars from UAE and China, and improvement in economic indicators,” Topline said in a report.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.17 percent or 64.61 points to close at 38,547.76 points level. Tracking the benchmark index, KSE-30 shed 0.26 percent or 46.87 points to end at 18,193.20 points level.

Of 338 active stocks, 112 moved up, 205 retreated, and 21 remained unchanged.

Investor participation improved as traded volume increased 17 percent to 83.084 million shares, compared to 70.809 million shares in the last session, while traded value went up 10 percent to Rs3.5 billion against Rs3.2 billion on Tuesday.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks closed lower on the post earnings season profit-taking on weak earnings outlook.

”Uncertainty over rupee-dollar parity, concerns over terms of IMF bailout package, foreign outflows, and surging CPI Inflation data led to the negative close,” Mehanti added.

Salman Ahmad director institutional sales at Aba Ali Habib said uncertainty related to IMF deal kept big investors on the sidelines.

“They have been away from the market anticipating an interest rate increase and dollar appreciation,” Ahmad added.

The State Bank of Pakistan has already increased the key interest rate by 450 basis points in the last 16 months, while inflation rate for February came at 8.2 percent, the highest since 2014.

An analyst said the IMF’s pressure to keep inflation in check might force the policy rate to go up in the range of 25 to 75 basis points. The monetary policy announcement for the next two months is likely due by the end of next week. Currently the benchmark interest rate stands at 10.25 percent.

A leading analyst said in absence of any positive triggers a tough road seems ahead given the government’s adopting a consolidation strategy to keep twin deficits in check.

Pakistan’s stock market is facing worst days in terms of participation because of economic turmoil.

The extent of the ongoing anxiety can be gauged from the fact that attractive valuations on top of relatively better trade and current account deficit numbers, announced recently, have so far failed to even budge the sentiments.

The highest gainers were Unilever Foods, up Rs99.00 to close at Rs7499.00/share, and Service Industries Limited, up Rs14.69 to finish at Rs764.69/share.

Companies that booked highest losses were Phillip Morris Pakistan down Rs198.75 to close at Rs3776.25 share, and Wyeth Pakistan Limited down Rs52.95 to close at Rs1023.77/share.

Dewan Cement recorded the highest volumes with a turnover of 3.895 million shares. The scrip gained Rs0.6 to close at Rs12.21/share.

The lowest volumes were witnessed in BOP recording a turnover of 7.368 million shares, whereas the bank’s scrip lost Rs0.02 to end at Rs13.22/share.