Worries over economic recovery, rupee shakes stocks

Stocks fell over one percent on Wednesday as continued foreign selling in blue chips and concerns about lower economic growth dented investor appetite for risky assets, dealers said.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index shed 661.30 points or 1.51 percent to close at 43,221.78 points against 43,883.08 points recorded in the last session. The index tested a day high of 44,171.60 points and a low of 43,067.61 points

Analyst Ahsan Mehanti at Arif Habib Corp said stocks fell across the board on investor concerns for global equity sell-off, higher inflation amid a slump in rupee. KSE-30 index also closed down by 335.93 points or 1.95 percent to 16,881.07 points against 17,217 points.

“Uncertainty over the outcome of ongoing Pakistan -IMF talks under EFF and economic uncertainty amid surging trade deficit, bond yields played a catalytic role in bearish close,” he said.

The IMF expects Pakistan’s economy to grow at 4 percent this fiscal year, lower than the government’s target of 4.8 percent for FY2022.

The Fund forecasts the average rate of inflation to be around 8.5 percent, current account deficit of 3.1 percent, and employment rate at 4.8 percent.

Traded shares fell by 50 million shares to 354.96 million shares from 404.91 million shares. The trading value dropped to Rs12.29 billion from Rs15.60 billion. Market capital dropped to Rs7.582 trillion from Rs7.686 trillion. Out of 543 companies active in the session, 86 posted gains, 436 losses while 21 remained unchanged.

“Foreign selling was the main reason for the fall, while ongoing political uncertainty also kept investors on the sidelines,” a dealer said.

Dealers said the market was mostly affected by a decline in rupee value, an unstable economy, and falling international markets.

The rupee has been under pressure due to higher imports, the spike in global commodity prices, and the widening of the current account deficit. Moreover, the outflow of dollars outside the country, and into Afghanistan following the regime change in the neighbouring country is also hurting the domestic currency.

“There was no proper road map for the development and growth of the economy that had affected the market sentiment in today’s trade,” a dealer said.

Dealers said the FBR’s revival of laws to access accounts of traders also affected investors.

The highest increase was recorded in shares of MithchellsFruit, which rose by Rs11.68 to Rs357.41/ share, followed by K.S.B Pumps that increased by Rs8.30 to Rs217.30/share. A major decline was noted in shares of Rafhan Maize, which fell by Rs174 to Rs10,725/share, followed by Colgate PalmXB that decreased by Rs79.31 to Rs2,424.69/share.

Hascol Petrol remained the volume leader with 36.75 million shares with a drop of Re1.0 to Rs5.16/ share. It was followed by WorldCall Telecom with 28.86 million shares that closed lower by 15 paisas to Rs2.06/share.

Stocks that recorded significant turnover included Telecard Limited, Ghani Glo HolXB, TRG Pak Ltd, Unity Foods Ltd, Treet Corp, Hum Network, Byco Petroleum and Faysal Bank.

Shares’ turnover in the future contracts slightly decreased to 128.05 million shares from 129.39 million shares.