Stocks stuck in status quo as monetary announcement draws near

Stocks on Thursday saw their fourth consecutive subdued session as there was no letup in selling by institutional and foreign funds, while majority of investors is playing safe with monetary policy announcement drawing near, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.13 percent or 54.33 points to close at 42,506.94 points, while its KSE-30 index shed 0.05 percent or 10.83 points to end at 19,728.54 points.

Ahsan Mehanti from Arif Habib Corporation said, “Bearish trend continued with higher trades amid uncertainty over SBP (State Bank of Pakistan) policy announcement next week and concerns over UNCTAD (United Nations Conference on Trade and Development) global investment report showing a 20 percent fall in foreign direct investment in 2019”.

“Banking and cement stocks outperformed on reports for surging banking spreads and likely higher earnings payout.” Foreign outflows, dismal financial results in oil, cement sector, falling global crude oil prices and uncertainty over state-run entities’ privatisation policies weighed on stocks, Mehanti added.

Of 368 active scrips, 154 were up, 190 retreated, and 24 ended inert. The ready market volumes improved to 230.827 million shares, as compared to 177.984 million shares in the previous session.

Salman Ahmad, head of institutional sales at Aba Ali Habid Securities, said, “Adjustment set in as the market rose sharply and it thus need technical correction”. Ahmad said all eyes were now glued to monetary policy announcement.

“The main hurdle is the inflation rate, which might rise further owing to increasing utilities prices and food inflation,” he said.

A leading trader said, “The market is hoping for a positive news from the FATF-Pakistan meeting, where it has been said that some good inroads has been made and Pakistan is likely to fulfill the immediate demands and China parleys, if successful, can help rebuild a rally in the coming week”.

An analyst said the trend was likely to be downward or mixed as much would depend on the monetary policy announcement, due on January 28. “The inflation has been on the higher side and general expectations are the rate will remain unchanged at 13.25 percent,” the analyst added.

Arif Habib Limited in daily report said, “The market traded in the range of -122 points and +345 points, closing the session at -54 points”.

Cement sector stocks performed well hoping a manufacturers meeting (during the

market hours) might hike prices for the northern factories, but the expectation did not materialise, which resulted in cement shares losing gains made earlier, the brokerage added.

The highest gainers were Colgate Palmolive, up Rs133.99 to close at Rs2583.99/share, and

Service Industries Limited, up Rs44.82 to finish at Rs859.83/share.

Pakistan Tobacco, down Rs115 to close at Rs2,035/share, and Siemens Pakistan, down Rs36.34 to close at Rs648.64/share, emerged as the major losers.

Maple Leaf Cement was the volume leader with a turnover of 27.576 million shares and gained Rs0.67 to end at Rs22.92/share.

The lowest volumes were witnessed in Cherat Cement recording a turnover of 5.138 million shares, whereas the scrip gained Rs1.07 to end at Rs53.74/share.