Stocks fall on budgetary concerns, rupee parity

Stocks lost more than one percent on Monday as widespread selling permeated across the board, especially in financial, E&P, and fertiliser sectors owing to budgetary concerns, government decision to withdraw deposits from commercial banks, and rupee parity, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Panic selling was witnessed at the PSX on post-budget uncertainty and lack of institutional support, as investors await activity by market support funds approved by the Economic Coordination Committee.”

Withdrawal of zero-rated facility on exports, higher taxes on cement, sugar and auto sector in the federal budget FY20, dismal data on CPI inflation surging to 9.1 percent in May 2019, and instability in rupee parity played a catalytic role in the bearish close, Mehanti added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 1.14 percent or 404.13 points to close at 35,168.82 points level. KSE-30 shares index followed suit with a low of 1.25 percent or 209.25 points to end at 16,594.51 points level. Of 347 active scrips, 89 moved up, 236 retreated, and 22 remained unchanged. The ready market volumes stood at 128.136 billion shares, as compared with the turnover of 167.876 billion shares in the previous session.

Madiha Javed, head of research at Ismail Iqbal Securities, said, “KSE-100 index remained negative throughout the session. Commercial banks, E&Ps, and fertilisers were major draggers of index, collectively shedding 255.22 points today.”

Banks came under pressure as news came in that the government has created Treasury Single Account (TSA) at central bank, and would withdraw all of its deposits from commercial banks worth Rs2 trillion under precondition to win IMF bailout in a couple of weeks, she added.

An analyst from Habib Metro-Finance said, “PSX-100 broke the streak with a pessimistic start to the week, which can be associated with profit-taking.” Investors’ sentiments were further dampened, as ADB refuted Pakistan’s claim of $3.4 billion loan which was not yet finalised.

“Moving forward, the market may witness short-term recovery on the back of attractive valuations; hence, we recommend investors’ to stay on the hunt and cherry pick fundamentally strong scrips,” the analyst added. A leading trader said foreign investors were reluctant to make fresh deals, as market talks suggest the rupee might go down further.

Selling was evident in some of the textile, leather and other stocks because of government decision to abandon zero-rating facility and imposition of 17 percent sales tax. Auto shares were down as recent sales numbers depicted a decline. Indus Motors shares went down by Rs11, Honda Atlas by Rs1.56, and Ghandhara Nissan went down Rs1.74. However, Pak Suzuki shares were up Rs2 on reports that the company has launched 660cc vehicle, which would likely improve the sales and profits of the company in coming quarters. The highest gainers were Jubilee Life Insurance, up Rs7.63 to close at Rs270.00/share, and Dawood Law, up Rs5.43 to finish at Rs193.43/share.

Companies that booked highest losses were Nestle Pakistan, down Rs97.01 to close at Rs6,989.99/share, and Mari Petroleum, down Rs35.13 to close at Rs1,063.51/share. Maple Leaf recorded the highest volumes with a turnover of 13.819 billion shares. The scrip gained Rs1.08 to close at Rs26.38/share.

The lowest volumes were witnessed in K-Electric Limited, recording a turnover of 3.664 million shares, whereas the scrip lost Rs0.13 to end at Rs4.27/share.