Stocks lose over 2pc as market support fund limbo spurs selling

Stocks on Tuesday tumbled over two percent, weighed down by reports that the much-awaited market support fund approval was languishing in approval limbo, while a drop in international crude oil prices also dragged the share prices down, dealers said.

Madiha Javed head of research at Ismail Iqbal Securities said the remained negative throughout the session amid news that Federal Board of Revenue was mulling increasing regulatory duties on hundreds of products to meet an ambitious target for the next fiscal year.

“News that there has been no progress on a market support fund and an opportunity fund worth Rs20 billion and Rs5 billion, respectively, turned the market into bearish,” Javed said.

She added that during the day news came in that Pakistan Stock Exchange (PSX) chief executive Richard Morin has stepped down and his resignation has been accepted by board of directors with immediate effect.

The PSX’s benchmark KSE-100 shares index lost 2.10 percent or 748.09 points to close at 34,949.28 points level, whereas KSE-30 shed 2.60 percent or 442.98 points to end at 16,601.94 points.

Of 327 active scrips, 70 moved up, 238 retreated, and 19 remained unchanged. The ready market volumes stood at 152.298 million shares, as compared with the turnover of 125.221 million shares in the previous session.

Ahsan Mehanti from Arif Habib Corporation said investors, who had been awaiting activity by disaster support fund, approved by finance minister, panicked on reports that the fund was facing execution delays. “Pre-budget uncertainty, dismal data on DAP fertiliser sales for April 2019, reports on falling local cement prices and instability in the rupee-dollar parity contributed to a bearish close,” Mehanti added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said the market slipped sharply on a combo of technical and on speculative reasons.

Ahmad explained last week the market after rising sharply had entered the overbought zone and also it was a rollover week and future transactions would be settled by Thursday.

“There are speculation about the establishment of the market support fund as it would take time, triggering whispers whether it will be finalised or not,” Ahmad said, adding, the market needed a positive development to get back on saddle.

Faisal Shaji, strategist at Standard Capital, said many items were at resistance after great surge in the benchmark index. Hence there was selling, though to the dismay of retail investors.

“Market thinks that budget is inflationary and loaded with GST (general sales tax). Stability can return in share market post IMF (International Monetary Fund) laden budget. Topline Securities in its market review said exploration and production companies eroded 170 points from the index ,followed by fertilisers and banks, which cumulatively depleted the index by 323 points.

The highest gainers were Unilever Foods, up Rs276 to close at Rs5980/share, and Nestle Pakistan, up Rs251 to finish at Rs7340/share. Companies that booked highest losses were Rafhan Maize, down Rs324.50 to close at Rs6180/share, and Indus Motor Company, down Rs60.10 to close at Rs1141.90/share.

Fauji Cement recorded the highest volumes with a turnover of 12.032 million shares. The scrip lost Rs0.92 to close at Rs16.82/share. The lowest volumes were witnessed in The Searle Company recording a turnover of 4.267 million shares, whereas the scrip lost Rs3.41 to end at Rs150.98/share.