Stocks flat as runaway oil worsens global inflation outlook

Stocks on Thursday ended barely changed as panic-selling raged the whole day long, for the most part due to geopolitical and economic uncertainties, with world crude oil markets continuing to scale new peaks, traders said.

After testing a high of 44,706.46 and a low of 44,312.74 points, KSE-100 Shares Index, the benchmark of Pakistan Stock Exchange (PSX), edged up 11.60 points or 0.03 percent to close at 44,525.72 points.

Zafar Moti, a former PSX director, said On Wednesday evening, the world was expecting Russia and Ukraine might sit down and talk as the NATO and the US were not getting involved, but on Thursday morning oil prices shot up even higher as the war was nowhere near an end.

“Good news was eclipsed by the bad.” On the other hand, local political noise also weighed, Moti said.

He said owing to a liquidity crunch, fund managers are not entering the market.

“Despite big amnesty scheme, the corporate sector situation is not improving; however, if the same relief is provided to the capital market, it will definitely jump.”

There were concerns how the widening of current account deficit because of oil import, would be managed, Moti said and warned that oil could hit $125, if the war in Eastern Europe prolonged further.

KSE-30 Shares Index gained 49.07 points or 0.28 percent to 17,409.86 points compared with 17,360.79 points recorded in the last session.

Traded volume decreased 47 million to 188.66 million from 235.03 million, while value also lowered to Rs7.36 billion from Rs9.34 billion. Market capital narrowed to Rs7.654 trillion from Rs7.660 trillion. Out of 358 companies active in the session, 116 posted gains, 209, losses while 33 remained unchanged.

Topline Securities Ltd in a note said the equities witnessed a mixed trend as Russia-Ukraine conflict was escalating.

Initially, the index saw buying interest in the oil & gas sector stocks, courtesy to rally in global oil prices, which supported the benchmark index, the brokerage said.

However, according to Topline analysts, rising coal prices continued to remain a cause of concern for the cement sector that saw investors trimming their positions.

Oil and gas exploration and production, power, and banking stocks contributed positively with PPL, POL, OGDC, HUBC, and UBL adding 166 points to the index cumulatively. On the flip side, LUCK, SYS, and MEBL lost 60 points to collectively.

As the best gainer on the benchmark index, Rafhan Maize popped to Rs11,500/share, jumping by Rs200, followed by Sanofi-Aventis, which added Rs61 to reachRs960/share.

Nestle Pakistan led the losers by dropping Rs205 to Rs5,540/share, followed by Sapphire Textile that declined Rs55.90 to close at Rs923.03/share.

An analyst report of Arif Habib Ltd, a brokerage house, said the market opened under pressure on inflationary concerns arising from higher fuel prices and overheated commodities’ cycle.

TRG Pakistan Ltd was the highest traded stock of the day with 15.14 million, followed by OGDC that saw its 11.65 million shares changing hands.

Other major contributors in terms of volumes included Fauji Cement, Flying Cement (R), K-Electric Ltd., Telecard Limited, Unity Foods Ltd, Pak Petroleum, Dewan Motors, and TPL Properties.

Future contracts turnover sank to 57.37 million shares from 97.64 million shares.