Stocks flat as political unrest ignites economic fears

Stocks on Friday ended flat after moving both ways as investors preferred to play safe on a day the opposition chose to flex its people-power muscle with antigovernment rallies and a shutter-down strike, raising economic uncertainties, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index gained 0.24 percent or 95.52 points to close at 40,164.02 points, while volumes decreased to 254.204 million shares from 324.790 million shares on Thursday.

KSE-30 shares index gained 0.38 percent or 63.88 points to end at 16,934.86 points. Topline Securities in a note said, “The index depicted erratic behavior today, where it traded between an intraday high of 152 points and intraday low of -326 points”.

Low participation was observed today, where investors preferred to remain on the sidelines mainly because of political noise in the country where opposition was staging multiple power shows against the government, the brokerage said.

Analyst Ahsan Mehanti from Arif Habib Corporation said, “Stocks showed recovery in thin trade amid surging global crude oil prices and speculations in the earnings season”.

Mid-session pressure remained owing to ongoing political noise, uncertainty over FATF decision on Pakistan after Mutual Evaluation Report of Asia Pacific Group found noncompliance on four recommendations, he said.

“Strong data on cement and auto sales for September, G20 decision to give Pakistan a 6-month extension on debt repayment, World Bank approval of $1.15 billion financing agreements, upbeat HBL results, strong rupee recovery, and encouraging LSM growth at

1.19 percent in August kept the index ticking upwards,” Mehanti added.

Muhammad Saeed Khalid, head of research at Shajar Capital, said, the prevailing negativity regarding FATF along with the concerns over Pakistan Democratic Movement (PDM) rally kept the volumetric activity in check.

“The index recovered later in the second half mainly on the announcement of better than expected financial result of HBL, which boosted the index to mark a high of 152 points during the day,” he said.

Khalid added that the announcement of 3.66 percent year-on-year growth in LSM numbers improved activity in manufacturing and trade sectors in the latter hours. Trading activity was recorded in 391 active scrips, of which 225 strengthened, 143 weakened, and 23 ended neutral.

A A Soomro, managing director KASB Securities, said, “The market has started to respond to good news. With PKR strengthening -despite falling foreign exchange reserves- the confidence is slowly coming back”.

“The political noise is going to keep the optimism eclipsed over next few months.” Soomro, however, added that the earnings season and positive surprise might let bulls dominate the bears. “The valuations of various sectors are too good to be ignored and a turnaround is visible,” he said and added that next week earnings season would show a V-shaped recovery.

Indus Dyeing, up Rs40.31 to close at Rs577.80/share, and Bata Pakistan, up Rs35 to finish at Rs1,650/share, recorded the highest gains, while Nestle Pakistan, down Rs175 to close at Rs6,425/share, and Sapphire Textile, down Rs44.74 to close at Rs740.01/share, posted the biggest losses during the day.

Unity Foods Limited, up Rs1.01 to end at Rs17.72/share, was the volume leader with 45.064 million shares, whereas Power Cement, down Rs0.05 to end at Rs9.21/share, registered the lowest turnover.