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May 29, 2019

Stock market tumbles again

Top Story

May 29, 2019

KARACHI: 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 stocks remained negative throughout the session amid news that the Federal Board of Revenue (FBR) 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,” Madiha 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.

On Tuesday, dollar reached the Rs151 mark in the interbank market, with the rupee falling by Rs1.40. Besides increase in dollar rate, the gold rates also slightly increased.

On Tuesday gold was sold for Rs59,757 per 10 grams in Pakistan, and price of gold was Rs69,700 per tola.

Meanwhile, K-Electric increased its electricity tariff for consumers, which will be applicable from the next billing cycle, a statement said.

The increase has been done as per National Electric Power Regulatory Authority (Nepra) revised electricity tariff terms and conditions in SROs dated May 22, 2019, issued by the Ministry of Energy (Power Division).

This revision was in line with the consumer-end tariff charged under the uniform tariff policy applicable across Pakistan, and no increase has been made in the rates for residential consumers having consumption up to 300 units, the statement said.

Under the new tariff regime, certain terms and conditions have been revised including the implementation of time of use (ToU) billing where eligible consumers would be charged based on their consumption during peak and off-peak hours.

Moreover, bank charges and meter rent would no longer be charged to customers. Whereas a new A3 General Services tariff category has been introduced and criteria for lifeline consumers and industrial consumers having tariff category B1 and B2 has been revised. In addition, Rs3 per unit relief provided to industries under Industrial Support Package has now been merged into consumer-end tariff and this adjustment would no longer be shown separately in the electricity bills.

The rupee reversed gains to end lower on Tuesday, as month-end demand for the greenback from importers weighed on the domestic currency, market participants said.

The rupee closed at 150.22 against the greenback, 48 paisas, or 0.32 percent, weaker than Monday’s closing of 149.74 in the interbank market. It had traded in the range of 149 to 150.75 during the day. The rupee was flat at 150 at the end of the forex trade in the open market.

“The currency weakened in a volatile trading due to demand and supply factors and mostly pending payment pressure as New York forex market was closed on Monday,” a market participant said.

“Dollar buying from a foreign bank also exerted pressure on the rupee.” The rupee is expected to trade in the band of 149 to 151 against the dollar this week, dealers said.

Dealers expect pressure on the currency to ease with strong remittances due to Ramazan and Eid.

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