Stocks flat as bargain-hunters offset profit-takers in volatile trade

Stocks on Wednesday ended little changed in roller-coaster trade amid a tug-of-war between bargain-hunters and profit-takers that ended in a near draw in the first post monetary tightening session, dealers said.

Topline Securities in a note said it was yet another flat day for the market, following yesterday’s monetary policy announcement.

“The SBP (State Bank of Pakistan) hiked policy rate by 100bps to 13.25 percent, which was in-line with market expectations,” the brokerage said. Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.03 percent or 9.97 points to close at 32,981.99 points, whereas its KSE-30 shares index hit a low of 0.09 percent or 13.38 points to end at 15,578.42 points.

Of 308 active scrips, 145 moved up, 146 retreated, and 17 remained unchanged. The ready market volumes were recorded at 111.558 million shares, compared to 138.726 million in the previous session.

Analyst Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed flat in a volatile session after the SBP raised the rate policy on higher inflation outlook”. Selected banking stocks and cash rich oil sector scrips outperformed on likely gains from surging banking spreads and banking deposits, Mehanti said.

“Selected stocks in cement and engineering sector were battered on higher leverage cost, while hopes of an improvement in trade ties with US after Prime Minister’s visit next week guided the index to a positive close,” he added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said though the index ended with a paltry gain, but volume appreciated which was a positive portent. Governor State Bank’s statement that by next financial year higher inflation cycle would hopefully come to an end, giving room for some monetary easing, Ahmad added.

“All the one-off hike of utilities (tariffs) and depreciation of rupee have been accounted for and things would start settling down in next six months,” the analyst explained. Most of the analysts were of the opinion that interest rate has reached its peak and now everything depended on the key economic numbers to change the overall stance of the central bank.

“A mixed trend was observed across the board where the cyclical sector, i.e. automobile dragged the index by 23 points amid expectation of a further decline in volumetric sales under the ambit of consumer financing,” Topline Securities said.

The brokerage added that the banking sector being the major beneficiary of the policy rate added 30 points to the index. An analyst said Dr Raza Baqar, governor State Bank had hinted that there was a possibility for a downward revision of interest rate if economic numbers improved later in the fiscal year.

The highest gainers were Nestle Pakistan, up Rs300 to close at Rs7100/share, and Sapphire Textile, up Rs54.98 to finish at Rs1329.98/share. Companies that booked highest losses were Indus Motor Company, down Rs49.22 to close at Rs1117.98/share, and Siemens Pakistan, down Rs30.50 to close at Rs579.50/share.

The TRG Pakistan Limited recorded the highest volumes with a turnover of 10.814 million shares. The scrip lost Rs0.65 to close at Rs13.64/share. The lowest volumes were witnessed in Engro Polymer recording a turnover of 3.477 million shares, whereas the scrip gained Rs1.21 to end at Rs27.66/share.