Stocks mostly inert on market fund limbo; volumes at 7-year low

Stocks on Thursday ended mostly inert, trading in a tight range with volumes hitting seven-year low, largely due to renewed uncertainty around the launch of market support fund and fears that a standoff between the government and traders over new taxes may slow down economy, dealers said.

Topline Securities in a note said stocks continued to remain range-bound as investors preferred to stay on the sideline despite government’s claim of launching the market support fund in 5- 6 days as per media sources.

“Launch of the fund at a moment when IMF (International Monetary Fund) has imposed a ceiling on the government guarantees seems unlikely to investors. Uncertainty over support fund along concerns over higher interest rates diverted investor interest to fixed income relative equities,” the brokerage said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.10 percent or 35.35 points to close at 33,875.40 points, whereas KSE-30 was up 0.39 percent or by 62.30 points to end at 16,010.75 points.

Of 305 active scrips, 114 moved up, 168 retreated, and 23 remained unchanged. The ready market volumes stood at 39.486 million shares, which is almost seven-year-low, compared to 40.611 million in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib said, “Though, all the developments turned out as expected, the business community’s reservations over the new taxation measures, given the government’s no-leniency stance on them, may result in slowdown in economic activities”.

“Documentation is good for the overall economy as it will help improve tax collection but measures adopted by the government have met with stiff resistance from the traders, who, if they go on a nationwide shutter-down strike, can drag the economy down,” Salman said.

Ahsan Mehanti from Arif Habib Corporations said, “Stocks showed recovery led by selected auto, oil and banking scrips on strong valuations”.

“Upbeat data on $21.84 billion home remittances in FY19, reports on surging bank deposits and higher banking spreads, hike in local auto prices and higher global crude oil prices guided the index to a positive close,” Mehanti added.

Arif Habib Limited in their market review said, “The volumes reached an 8-year low of 40 million, and today the marked yet another low of 39.5 million shares”.

The market on close showed improvement in points table that resulted in index closing with (+35 points), the brokerage house added.

A leading analyst said the export-related listed companies, especially from textile sector, witnessed a dull session. The main factor behind this, he said, was the abolition of zero-rated regime, which would further trim the exports, reducing the earnings of the companies.

The highest gainers were Bata Pakistan, up Rs61 to close at Rs1369/share, and Pakistan Oilfields, up Rs3.33 to finish at Rs402.81/share.

Highest losses were seen in Colgate Palmolive, down Rs25 to close at Rs2050/share, and Wyeth Pakistan Limited, down Rs24.99 to close at Rs700.00/share.

Dost Steels Limited recorded the highest volumes with a turnover of 4.387 million shares. The scrip gained Rs0.27 to close at Rs4.11/share.

The lowest volumes were witnessed in Shabbir Tiles with a turnover of 801,500 shares, whereas the scrip lost Rs0.14 to end at Rs9.58/share.