Stocks fall as political noise fuels economic fears

Stocks fell on Monday as profit-selling went into full swing ahead of monetary policy meeting, while political noise raised alarms for the economy that has just started showing some signs of recovery, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index lost 0.78 percent or 330.62 points to close at 42,174.14 points level, while the volumes decreased to 433.941 million shares from 516.126 million shares in the previous session.

AA Soomro, Managing Director at KASB Securities, said, “The investors panicked a little after the stern tone of APC (all parties conference) meeting especially, former Prime Minister Nawaz Sharif's direct remarks against the armed forces”.

“Just when the economic adjustments are done, political noise starts growing louder as always. However, we believe the negativity would be neutralised in coming weeks,” he said. “However, the governor's tone & intent needs to be assessed & analysed for better forward guidance at times when global central banks have indicated lower-for-longer for a while,” Soomro added.

KSE-30 shares index was down by 0.87 percent or 156.41 points to end at 17,889.85 points level. Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said “The market performance was mixed-to-down as all the participants were practising caution ahead of monetary policy announcement”.

The central bank’s monetary stance would dictate the market in couple of sessions, he said. Ahmed added that the index was down because of the technical reasons like the market’s overbought situation and the commencement of the rollover week, which led to adjustment in stocks, selling outstanding shares. Trading activity was recorded in 408 active scrips, of which 115 went up, 277 down, and 16 stayed as they were.

Muhammad Saeed Khalid, head of research at Shajar Capital said, “The market was in the negative territory, as investors remained cautious ahead of monetary policy meeting”. “Further, investors booked profits mainly on the slide in exports for the two months to August 31, 2021,” he said.

“In addition to this, uncertainty over political scenario along with the GIDC collection, have induced volumetric volatility in the Pakistan Stock Exchange, as All Share index volume continued to dry out',” Khalid added.

Shahab Farooq, director research at Next Capital said, the market witnessed another profit-taking day in the main board sectors and stocks including banks, E&Ps, and cements. “The news of FinCen leaks added pressure to the banking sector stocks,” Farooq added.

Ansreen Malik at equity desk of BMA Capital Management said, “The market looks in a consolidation phase with profit-taking above 42,500 points level and a sharp resistance level above 43,000 points, which the index has not been able to cross”.

“There is market noise of political pressure and monetary policy decision with majority votes for a status quo,” Ansreen said. Island Textile, up Rs72.61 to close at Rs1,040.78/share, and Gatron Industries, up Rs42.43 to finish at Rs671?/share, while Colgate Palmolive, down Rs101.83 to close at Rs2,970/share, and Nestle Pakistan, down Rs93.33 to close at Rs6,900/share, were the main losers.

With 58.910 million shares, Aisha Steel Mill was on the top of the volumes chart, gaining Rs0.98 to end at Rs15.49/share, whereas Pakistan Refinery, with 9.002 million traded shares was at the bottom and lost Rs0.99 to end at Rs21.36/share.