Stocks flat ahead of holidays; support fund helps pare early losses

Stocks on Thursday slipped into stagnancy a day after a record rally as investors switched on risk-off mode ahead of almost weeklong holidays, while market support fund approval helped pare early losses, dealers said.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said two important developments, i.e., federal budget and Financial Action Task Force meetings were around the corner and would decide the course of the bourse in the upcoming months.

“However, several investors have a lot of reservations on budgetary measures that would be mostly aimed at generating revenue to squeeze the fiscal deficit,” Ahmad said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.04 percent or 15.36 points to close at 35,974.79 points level, whereas KSE-30 shares index lost 0.14 percent or 24.24 points to end at 17,155.60 points level.

Of 325 active scrips, 119 moved up, 184 retreated, and 22 remained unchanged. The ready market volumes stood at 199.132 million shares, as compared with a turnover of 182.477 million shares in the previous session.

Madiha Javed, head of research at Ismail Iqbal Securities, said the benchmark index opened on a positive note today.

Yesterday’s PIBs auction saw record participation with bids of Rs465 billion against State Bank of Pakistan’s target of Rs100 billion, Javed said adding, on a positive note, the 10-year PIB yield came in at 13.6 percent, while 5-year PIB yield was higher at 13.8 percent. The market dipped around the mid-session, though it recovered near the end on reports that Economic Coordination Committee (ECC) has issued guarantee worth Rs20 billion for market support fund, Javed said.

The stock market finished with paltry gains; however, during the session the equities suffered losses recovered by more than 300 points. The main factor behind the decline was that in the ECC meeting held on Thursday failed to include the market support fund approval in its agenda. This resulted in nervousness amongst the market players; however, just before the close of the market news reports that ECC has approved the market support fund Rs 20 billion market support fund started doing rounds in the bourse and changed the sentiment for the better. Nonetheless, no official statement has been released as yet.

A leading analyst said the formation of the support fund would send positive signals to the market and might help absorb the developments related to budgetary measures. The state run enterprises would soon become active, the analyst said.

Topline Securities in its monthly market review said in the first half of May the market lost 7 percent on concerns over International Monetary Fund (IMF) bailout conditions. “Following finance advisor Hafeez Shaikh’s assurance of formation of support fund market rallied, where index gained 5 percent. Consequently, the market closed month on negative note by losing 2 percent, the brokerage said.

The highest gainers were Nestle Pakistan, up Rs148.40 to close at Rs7148.50/share, and Colgate Palmolive, up Rs98.75 to finish at Rs2073.75/share.

Companies that booked highest losses were Premium Textile, down Rs8.90 to close at Rs211.10/share, and ICI Pakistan, down Rs7.25 to close at Rs539.32/share.

BOP recorded the highest volumes with a turnover of 25.413 billion shares. The scrip lost Rs0.04 to close at Rs11.17/share. The lowest volumes were witnessed in Lotte Chemical recording a turnover of 5.241 million shares, whereas the scrip lost Rs0.7 to end at Rs15.69/share.