Stocks barely move as FATF, IMF jitters weigh heavy

Stocks on Monday barely budged in thin trade as edgy investors awaited global terror financing watchdog’s verdict on Pakistan, amid jitters over International Monetary Fund’s (IMF) holding on to its stiff stance on tax revenue collection shortfall and utilities tariffs, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.08 percent or 33.67 points to close at 40,276.93 points, whereas KSE-30 edged 0.03 percent or 5.38 points up to end at 18,604.04 points.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “The market was mixed to positive with volumes on the lower side as different analyses regarding IMF review kept investors confused”.

Some analysts were of the view the government would have to hike utilities’ tariffs and make some major adjustments for winning an approval for the next IMF tranche; however, few said that under the current scenario the statement was positive, Ahmad said.

“However, developments on IMF and FATF (Financial Action Task Force) fronts will dictate the market, while clarity over the economic discipline will help it gain momentum,” Ahmad added.

Of 327 active scrips, 134 gained, 169 lost, and 24 ended unchanged. Volumes reduced to 99.965 million shares, compared to 117.597 million shares in the previous session.

Ahsan Mehanti from Arif Habib Corporation said, “Stocks showed recovery led by selected scrips in oil sector amid strong financials”.

Moody’s credit positive review for local banks due to surging remittances, government’s resolve for control over inflation, circular debt crises, and hopes for positive outcome of FATF meeting, and hopes of release of IMF tranche amid satisfactory review kept the market afloat,” Mehanti added.

Faisal Shaji, strategist at First Standard Capital, said, “The market sentiment is jittery on internal issues such as erosion in investor confidence owing to KYC and external problems viz”. In the light of a not so conclusive IMF review, concerns over FATF meeting and fiscal deficit, lingering high inflation, which could be 12.7 percent in February, it seems interest rates were unlikely to come down beyond June, Shaji added.

A leading trader said the market throughout the session mostly remained negative with small patches of positivity. “The sentiment was depressed due to concerns over IMF comments which revealed the government and the IMF have not reached a staff level agreement it rather happened in the first review”.

In the latest statement it said some prior actions would be required before placing the case of Pakistan for the second review discussions and approval of loan installment amounting to $450 million.

Arif Habib Limited in a note stated, “The market witnessed dull activity today barely trading just 100 million shares, even lower than 118 million shares observed on Friday”.

Furthermore News related to HBL’s irregularities in New York branch caused panic amongst investors, however, HBL did recover significantly after a clarification from its management on the issue, the brokerage added. Colgate Palmolive, up Rs50 close at Rs2,150/share, and Service Industries Limited, up Rs39.05 to finish at Rs970.67/share were the top gainers of the day.

The major losers were Bata Pakistan, down Rs49.80 to close at Rs1,800/share, and Sapphire Fibre, down Rs46.99 to close at Rs715.01/share. Unity Foods Limited emerged as the volume leader with 16.257 million shares and it gained Rs0.75 end at Rs13.82/share. Kot Addu Power’s turnover was the lowest with only 2.669 million traded shares; however, the scrip gained Rs1.65 to end at Rs27.15/share.