Stocks fall on subsidy withdrawal jitters

Stocks fell on Tuesday as investors convulsed at the consequences of stripping industries of concessions and scaling down public sector spending to save a stalling IMF loan, traders said.

The rollover week of the future market also triggered the selling pressure in the market, bringing the equities down.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index fell 255 points to 45,817 points, while turnover also shrank to 210 million shares from 368 million on Monday.

Traded value slumped to Rs6.226 billion from Rs9.66 billion in the previous session, whereas market capitalisation ticked down to Rs.7.631 trillion from Rs7.675 trillion recorded a day earlier.

Arif Habib Corp’s Ahsan Mehanti noted that nervous investors resorted to profit-selling on concerns over impact of withdrawal of industrial subsidies and deep cuts in PSDP (Public Sector Development Programme) for resumption of IMF’s loan deal.

He believes the current account deficit of $13.17 billion in the first nine months of this financial year, circular debt crises, and slump in global crude oil prices led to the bearish close.

Darson Research quoted sources as saying that the Ministry of Planning, Development and Special Initiatives had likely decided to further trim rupee-funded Public Sector Development Programme 2021-22 from an already reduced level of Rs600 billion due to fiscal constraints.

“In order to bridge the financing gap, Pakistan requires dollar inflows of $9 to $12 billion in the shape of rollover and fresh loans from bilateral donors and commercial banks for avoiding further depletion of foreign currency reserves during the current fiscal year,” the brokerage added.

Arif Habib Limited in its market commentary stated volatility prevailed in the bourse right after a positive opening.

The 6-month KIBOR’s hitting a 13-year high of 14.10 percent, pulled the market down towards the red zone, giving the bears an upper hand, the brokerage said.

Overall, it added that the secession remained dull although hefty volumes were observed in the third-tier stocks.

Sectors contributing to the negative performance included energy (-64.6 points), technology (-38.7 points), power (-36.03 points), and cement (-33.2 points).

Stocks that added significantly to the volume were GTECH, LOTCHEM, HUMNL, WTL, and TELE.

Topline Securities in its daily market review said after a slight positive opening market traded sideways pushing the bench index to an intraday low of 290 points on concerns over ongoing EFF programme.

On the result front, INDU declared an EPS (earning/share) of Rs65.11 along with DPS (dividend/share) of Rs26, FCCL announced is 3QFY22 EPS at Rs 0.89 and BAFL reported its 1Q2022 EPS at Rs2.83, further KOHC announced its 3QFY22 EPS at Rs8.19

JS Research in its market wrap also pinned the losses Profit taking continued across the board today as benchmark index closed at 45,818, down 256 points DoD. Market opened in the green zone and touched an intraday high of 46,184, however was unable to sustain the momentum.

“Going forward, we recommend investors to avail any dips below 46,000 as a buying opportunity in the refineries, banking, oil & gas and cyclical sectors,” the JS report said.