Stocks fall as pharma-led rally cut short by late political noise

Stocks on Wednesday succumbed to political uncertainty after Pakistani Tehreek-e-Insaf-led ruling coalition suffered a blow with the exit of its key Balochistan ally, sparking fears the government was moving fast towards instability, which left investors worrying for economy, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 0.50 percent or 170.44 points to close at 33,848.68 points level. KSE-30 shares index followed suit with a low of 0.77 percent or 113.94 points to end at 14,632.79 points level.

Topline Securities in its daily stock report said, “The market opened on a positive note as investors cheered announcement of Dexamethasone, a drug expected to save lives in this coronavirus pandemic, and ICI Pakistan and Searle, the makers of this molecule, closed at 2.41 percent and 2.34 percent higher respectively”.

However, the market could not sustain the momentum as political noise emerged, the brokerage added.

“Sardar Akhtar Mengal, president Balochistan National Party-Mengal, on the floor of the house, announced his party was leaving the ruling coalition, which led the rout in last hour of session,” the brokerage said.

Of 379 active scrips, 135 went up, 219 retreated, and 25 remained unchanged. Volumes swelled to 340.855 million shares, as compared with the turnover of 217.925 million in the previous session.

Zia Shaafi, senior investment advisor Inter-Market Securities, said, “The market was down owing to resignation of Sardar Akhtar Mengal, President Balochistan National Alliance, walking out from the PTI government alliance”.

The trend was also a bit depressed because a downturn in the global markets owing to reports of second wave virus attack, Shaafi added. However, he said there had been little room for downward slide and a healthy rally was expected on technical grounds.

Saad Rafi, head of equity sales at Al Habib Capital Markets, said, “The market always bears the brunt of the political instability. Rumors of ‘no confidence’ move against Prime Minister Imran Khan after BNP-Mengal (Balochistan National Party) opted to move out from the ruling alliance left the market shaken".

He said sensing some political disillusionment among coalition members, Prime Minister Imran Khan was forced to visit Karachi to meet MQM party members and he was also under fire for indecisiveness and confusion on lockdown or smart lockdown, amid a rift with Sindh government over the same. “Political instability has always been a bad omen for the capital market,” Rafi said.

Saad Hashmey, executive director at BMA Capital Management said, "The main factor behind today’s fall was the continued concern on the imposition of a stricter lockdown in major cities (including Karachi) and also announcement of a withdrawal of coalition member party from Pakistan Tehreek-e-Insaf (PTI) led government”.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, “Within two hours before the close the market, which was earlier in upbeat mood, turned negative”. Political developments would dictate the sessions ahead, and apparently it would be resolved soon, Ahmed said.

He added that investors have some worries about the lock down but the morning trend which showed a rise of 300 points showed the factor has been already absorbed somewhat, Ahmad said. The top gainers were Phillip Morris Pakistan, up Rs119.05 to close at Rs2019.00/share, and Nestle Pakistan, up Rs99 to finish at Rs6500.00/share. Sapphire Textile, down Rs60 to close at Rs790/share, and Sapphire Fibre, down Rs30 to close at Rs670/share, were the main losers. Unity Foods Limited recorded the highest volumes with 43.947 million shares and lost Rs0.97 to end at Rs12.04/share. Quice Foods’ turnover was lowest with 7.035 million shares, whereas it also lost Rs0.42 to end at Rs4.69/share.