Stocks flattish; rate-hold spurs late recovery

Stocks were flattish on Friday as investors remained noncommittal until the announcement of a rate-hold by the central bank later in the day, which led a last minute recovery of some early losses, dealers said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 shares index lost 0.25 percent or 116.42 points to close at 45,868.04 points. Volumes shrank to 430.628 million shares, from 606.380 million on Thursday. KSE-30 index also shed 0.46 percent or 87.18 points to end at 19,060.98 points.

Topline Securities in its daily market review said lackluster activity was observed in the first half of trading session, whereas market came under pressure in second half as investors sat on the sidelines waiting for the monetary policy announcement by State Bank of Pakistan (SBP).

The market pared some losses at the eleventh hour right after the announcement of monetary policy, where the central bank kept the policy rate unchanged at 7 percent and gave forward guidance that policy rate would remain intact in near future and any increase down the line, if needed would be phased in, the brokerage added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said, the market was facing resistance around 46,000 points level and as soon it reached or breached the level, selling surfaced from all sides.

Furthermore, market showed some recovery from the lowest level after central bank announced it was holding the interest rate, Ahmad said. “Volumes are higher and confidence healthy, which will help index stage some smart recovery in coming sessions,” he added.

A A Soomro, managing director KASB Securities said the market was flattish as investors were waiting for the Monetary Policy Statement by the SBP, which kept the interest rate unchanged, providing further guidance for the next stance.

“Given the forward guidance we expect positivity to prevail next week,” he said. The UAE and Saudi loan rollover would also add positive sentiment, said Soomro, adding stocks would take cue from the corporate earnings results next week.

Of 391 active scrips, 142 moved up, 232 lost, and 17 remained unchanged. Tahir Abbas, director research at Arif Habib Ltd, said the market remained volatile and saw downward correction in phases as there were rumors the interest rate might go up.

"However with active participation and interest from institutions, the index closed almost flat as the announcement from the central bank arrived just before the close of the session,” Abbas added.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed lower in the earnings season rally on slump in global stocks and crude oil prices. Late session support was witnessed on SBP decision over status quo in the key policy rate, he added.

Investor concerns over current account deficit in Dec’20, rising circular debt and recent hike in power tariff for industrials brought the index to a bearish close, Mehanti said. Rafhan Maize, up Rs411 to close at Rs10,890/share, and ICI Pakistan, strengthening by Rs17.03 to finish at Rs859.08/share, ended the day with highest gains.

Nestle Pakistan, down Rs25 to close at Rs6,575/share, and Mari Petroleum, losing Rs23.52 to close at Rs1427.08/share, were the worst losers. K-Electric Limited led volumes with 54.062 million shares. The scrip lost Rs0.14 to end at Rs4.11/share. Unity Foods Limited posted the lowest turnover with 11.953 million shares, and lost Rs0.52 to finish at Rs32.94/share.