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July 20, 2019

Stocks settle for modest gains as political worries weigh

Business

July 20, 2019

Stocks on Friday settled for meager gains despite late bargain-hunting in selected scrips and upbeat current account deficit numbers, largely owing to concerns that a worsening ongoing political turmoil could destabilise the struggling economy of the country, dealers said.

Ahsan Mehanti from Arif Habib Corporation said the market closed little higher in late session rally during the earnings season amid bullish global equities.

“The reports on surging foreign exchange reserves amid release of $974 million IMF (International Monetary Fund) loan installment and hopes for an improvement in Pakistan-US trade ties following Prime Minister’s visit next week, guided the stocks to end in the green zone,” Mehanti added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.46 percent or 149.23 points to close at 32,458.77 points’ mark, whereas KSE-30 hit a high of 0.79 percent or 121.05 points to end at 15,395.59 points’ level.

Of 316 active scrips, 155 moved up, 129 retreated, and 32 remained unchanged. The ready market volumes stood at 121.556 million shares, compared to 87.413 million shares in the previous session.

An analyst from Habib Metro-Financial said, “We expect lackluster performance owing to a growing tussle between the government and the business community”. Moreover, the mounting tension on the political front is also likely to keep investors at bay, the analyst said.

“Hereby, we reiterate our cautious stance with portfolio exposure limited to fundamentally sound stocks only,” the analyst added. Overall market perception has not changed and inherent sentiment continues to remain weak because of the political ferment following the arrests of some key figures, which sent quite negative signals to investors.

Banks and financial institutions remained net sellers, deploying their funds at the treasury bills -short term government securities- because of the guaranteed return of more than 13 percent per annum.

The market at one stage slipped below 32,000 points level and touched the session low of 31,901 points. That’s where bargain-hunters jumped at the attractive valuations and started picking some choice scrips.

A leading analyst said the market turned positive on the back of upbeat current account deficit numbers. The current account deficit for FY2019 reduced 32 percent to around $13.5 billion, a positive development where government’s steps to control imports seem to have started paying off. However, others believe that economic issues are worrisome and the first quarter of the new fiscal was important in terms of setting the tone of the market.

The highest gainers were Hinopak Motors, up Rs13.50 to close at Rs335/share, and Archroma Pakistan, up Rs10 to finish at Rs475/share.

Companies that booked highest losses were Nestle Pakistan, down Rs340 to close at Rs6460/share, and Abbott Laboratories down Rs16.71 to close at Rs363.29/share.

Maple Leaf recorded the highest volumes with a turnover of 14.413 million shares. The scrip lost Rs0.24 to close at Rs19.78/share.

The lowest volumes were witnessed in Sui Northern Gas recording a turnover of 3.470 million shares, whereas it gained Rs2.73 to end at Rs64.65/share.

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