Stocks scarcely changed ahead of monetary policy statement

Stocks were subdued on Friday as profit-takers took the floor to cash in on a three-session rally that rolled up 1,300 points, while investors mostly remained on the sidelines ahead of monetary policy announcement on Monday, dealers said.

Ahsan Mehanti from Arif Habib Corporations said, “Stocks closed lower amid higher trades amid post earning season profit-taking”. “Falling global crude oil prices, concerns over the outcome of GIDC (Gas Infrastructure Development Cess) issue resolution for corporate sector pending hearing in Supreme Court, and auto sales, falling by 41 percent in August 2019, weighed on the sentiment,” Mehanti added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.21 percent or 65.30 points to close at 31,481.31 points, whereas KSE-30 shares index shed 0.55 percent or 81.69 points to end at 14,834.17 points.

Of 340 active scrips, 159 advanced, 153 retreated, and 28 remained unchanged. The ready market volumes stood at 103.093 million shares, compared to 185.842 million shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habib said, “The selling in today’s session was due to a technical correction; however the tone of next week will be decided by the monetary policy announcement scheduled for Monday”.

“A central bank status quo might give rise to some correction but as encouraging development arriving from FATF front will in near future is likely to encourage foreign investment,” Ahmad added.

A diminished interest from the seasoned investors and financial institutions led to a weak weekend close. Profit-taking in the choice scrips ensued following gains of over 1,300 points. According to a leading analyst, the market came under pressure because most of the analysts were of the opinion that the interest rate was likely to remain unchanged in the monetary policy statement announcement on Monday. “These speculations dampened investors’ mood, resulting in some selling pressure in heavy weights,” the analyst said.

Most of the analysts held the interest rate would see no change, while only a few viewed the recent trend seen in treasury bills auction, compression in imports, and narrowing of trade deficit might lead to some trimming in benchmark interest rate.

The market foresees a cut in the policy rate following a 31 basis points drop in the cut-off yield for 12-month papers in auction of treasury bills on Wednesday.

For the last over a year the interest rate is being increased to deal with the inflationary pressure in the economy. Lately, the government rebased the year for calculating the inflation which significantly reduced rate of inflation for July-August.

The highest gainers were Lucky Cement, up Rs16.70 close at Rs373.40/share, and Pakistan Gum & Chemical, rising Rs11.62 to finish at Rs251.63/share. The highest losers were Rafhan Maize, going down Rs200 to close at Rs6000.00/share, and Mari Petroleum, slipping Rs32.23 to close at Rs841.35/share.

Maple Leaf saw the highest a turnover with of 7.524 million shares, but lost Rs0.22 to end at Rs16.65/share. Engro Fertiliser’s trade volume remained the lowest at 2.981 million shares, whereas the scrip gained Rs1.14 to end at Rs71.97/share.