Stocks down as opposition turns up the heat on govt

Stocks on Thursday drifted down because of profit-booking, spurred by fears that shifting political loyalties may severely distract the government, currently busy fighting the worst economic fires of its term, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Share Index closed eased 168.46 points or 0.38 percent to 43,807.23 points after testing a high and a low of 44,194.26 and 43,796.65 points, respectively in the day trade.

Zafar Moti, a former director of PSX, said currently the PSX was trading below 2008 market crash levels in terms of multiples amid shrinking volumes.

“Market awaits incentives like the ones manufacturing and construction are enjoying. If that happens then the 80 percent money, which is currently sitting idle, will start flowing into equities, boosting the turnaround,” Moti said.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks closed lower amid thin trade as rupee instability, surging government bond yields and political noise weighed.

Stocks were also hit by reports the government was seeking to reduce development budget, while hike in power tariff amid surging trade deficit also depressed sentiment, Mehanti said.

The government raised Rs193 billion by auctioning fixed-rate Pakistan Investment Bonds, with the cut-off yields on three-, five- and 10-year papers trending upwards, the central bank data showed.

The yield on the three-year PIB rose 115 basis points (bps) to 11.8500 percent, five-year paper 100 bps to 11.7497 percent, and the rate on 10-year paper jumped 88 bps to 11.7418 percent.

KSE-30 Shares index also fell 193.09 points or 1.13 percent to 16,825.47 points compared with 17,018.56 points recorded in the last session.

Turnover dried up by a massive 88 million shares to settle down at 148.50 million from 236.50 million, while trade value slumped to Rs2.995 billion from Rs5.794 billion.

Market capital contracted to Rs7.404 trillion from Rs7.438 trillion.

Among active scripts, there were 110 advancers, 202 laggards, and 23 neutrals.

Topline Securities, in its daily market review, said equities played in a range of 389 points only with banks, food, fertiliser, and technology contributing positively.

Major support came from UBL, NESTLE, FFC, SYS, and HBL that cumulatively added 36 points, while TRG, HUBC, and PPL together eroded 59 points.

The top two major gainers were Rafhan Maize, up Rs300 to Rs11,700/share, and Nestle Pakistan, up Rs131.25 to Rs5,600/share.

The bottom two losers were Unilever Foods, down Rs299 to Rs21,500/share, and Sapphire Textile, down Rs65.85 to Rs999.22/share.

According to a JS Research market wrap, local stocks languished the whole day mostly because of a lack of positive triggers leading investors to book profits on higher side.

“Going forward, we expect range-bound activity to continue and recommend investors to avail any downside as an opportunity to buy in the tech, cement, and textile sectors,” the brokerage suggested.

Flying Cement (R) was the top volume-maker as it recorded a trade 36.23 million shares, trailed by WorldCall Telecom with 14.57 million shares.

Stocks that recorded significant turnover included TPL Properties XB, Unity Foods Ltd, K-Electric Ltd., Telecard Limited, Dost Steels Ltd., Pak Elektron (R), Bank Al-Falah, and Maple Leaf Cement.

Turnover in the future contracts decreased to 36.23 million shares from 59.95 million shares.