Friday June 09, 2023

Stocks sink ahead of monetary statement

By Our Correspondent
May 24, 2022

Stocks on Monday sank ahead of monetary policy meeting, as there was not even a straw of a trigger to clutch at amid a spectre of Sri Lanka-style default looming larger over Pakistan, traders said.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index lost 660.46 points or 1.53 percent to 42,440.25 points against 43,100.71 points recorded in the last session. The PSX went into a tailspin as seismic activity increased on the political landscape. The PTI is tightening the screws on the Shehbaz regime, eclipsing the government’s focus on economic firefighting. This added to the fears the battered economy might not come out of doldrums easily or in the near term.

PTI leader Imran Khan’s announcement to start his long march towards Islamabad on May 25, expectations of policy rate hike, concern over IMF programme, and rupee slump led to across-the-board losses.

Zafar Moti, a former director PSX, said the overall situation was deeply troubling and no respite seemed to be in store regarding the escalating political and economic crises. “Interest rate hike by 150bps, no feel-good news from IMF, persistence of fuel subsidies, which is a bone of contention between IMF and Pakistan, are not going to allow market move freely in the whole rollover week,” Moti said.

On the other hand, analysts are not clear on the future of the market after an increase in the interest rate. “We recommend investors to remain cautious with the 150 bps increase announced in the policy rate after the market hours,” advised Mubashir Anis Naviwala at JS Research.

KSE-30 Shares index also lost 274.17 points or 1.68 percent to 16,092.94 points. Traded shares decreased 71 million to 118.986 million from 189.926 million shares, while value dropped to Rs3.576 billion from Rs3.830 billion. Shares’ turnover in the future contracts increased to 91.496 million from 52.075 million shares.

Market capital shrank to Rs7.047 trillion from Rs7.143 trillion. Out of 314 companies active in the session, 48 closed in the green, 250 in the red, while 16 remained unchanged.

Ali Najib, an equity dealer at Topline Securities, said stocks slumped ahead of the Monetary Policy Committee (MPC) meeting as investors opted to stay sideline before the announcement. Initially, the market opened on a negative note and remained negative throughout the day, the analyst said.

Stocks from cement, technology, power, fertilizer, and energy sectors dragged the index down, Najib said adding, LUCK, SYS, HUBC, FFC, and OGDC lost 221 points, cumulatively. On the flip side, he said, MUREB, HMB, and BAFL saw some buying interest, adding 8 points to the index collectively.

The highest increase was recorded in the value of Bhanero Textile, which rose Rs102.45 to Rs1,525 per share, followed by Blessed Textile, up Rs19.99 to Rs509.99 per share.

Bata Pakistan was the worst loser of the day, down Rs99 to Rs1,900 per share, followed by Rafhan Maize that lost Rs90 to end at Rs9,900 per share. Arif Habib Ltd said it was a bloodbath as investors sold their positions the whole day.

The benchmark index went into a nosedive from the word go as increasing political noise, uncertainty regarding resumption of the IMF programme, continued depreciation of rupee against dollar, and market buzz of a rate hike shattered investors' confidence, it reported.

Silk Bank Ltd was the volume leader with 9.979 million shares. The stock closed higher by four paisas to Rs1.32 per share. It was followed by WorldCall Telecom with 7.624 million shares. The telecom fell by nine paisas to Rs1.50 per share.