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July 31, 2019

Index remains bearish as inflation fears spook investors


July 31, 2019

The capital market ended almost flat on Tuesday, slipping slightly lower for the second consecutive session over financial results that have mostly been below expectations on fear of rising inflation, dealers said.

Analyst Ahsan Mehanti from Arif Habib Corporations said stocks closed lower on concerns of foreign outflows and speculations that the consumer price index inflation for July 2019 would like surge upwards.

There was mid-session support, invited by the upbeat financial results in oil and gas sector and reports of rising banking spreads. “However, political uncertainty, dismal data on textile exports and concerns over economic uncertainty played a catalytic role in the bearish close, he added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.24 percent or 76.11 points to close at 31,658.12 points level. KSE-30 shares index followed suit with a low of 0.23 percent or 34.47 points to end at 15,069.94 points level.

Of 314 active scrips, 160 moved up, 134 retreated, and 20 remained unchanged. The ready market volumes stood at 51.288 million shares, as compared with the turnover of 45.785 million shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib said the market has anxiously been waiting for some positive development from the political or economic fronts to cheer up the mood.

The selling from financial institutions and below expected financial results also perturbed the investors. “Economy has slowed down, which resulted in weakening of financial numbers of the companies, especially the cement sector,” Salman said.

For some time now, the general tendency of the market has been weak, since local financial institutions and mutual funds have remained net sellers. The index since the start of the new year has lost almost 2,000 points. This has been the biggest blow to the investors, with most of the blue chips, investment and trading stocks having lost almost half the value from their peak.

Cement financial results went down on the back of measures taken by the government, which included ban on non-filers from buying real estate, change in the capital gains tax, and changes in the property valuation rules.

A leading trader said political uncertainty also deterred fresh investment in the rings, while the market has been affected by talks that the index might hit 30,000 points level. This has discouraged serious investors, who preferred to remain on the sidelines till the dust settles down.

Persistent calls given by the political parties to begin countrywide protests were also a key obstacle in fresh investment, a dealer said.

The highest gainers were Abbott Laboratories, up Rs15.06 to close at Rs371.73/share, and Atlas Honda Limited, up Rs14.95 to finish at Rs313.95/share.

Companies that booked highest losses were Nestle Pakistan, down Rs273.25 to close at Rs5,555.00/share, and Unilever Foods, down Rs175.00 to close at Rs5,600.00/share.

Maple Leaf recorded the highest volumes with a turnover of 4.733 million shares. The scrip lost Rs0.08 to close at Rs16.94/share.

The lowest volumes were witnessed in Bank Al-Falah, recording a turnover of 1.148 million shares, whereas the bank’s scrip gained Rs0.54 to end at Rs40.11/share.

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