Stocks rout for second day as rate hike bites

Stocks extended rout on Tuesday after the central bank tightened policy rate to rein in consumption-driven growth amid reports Pakistan will have to jump through more hoops of fire before getting IMF nod on loan revival, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index lost 489.93 points or 1.15 percent to close at 41,950.32 points after testing a day high and low of 42,636.54 and 41,917.55 points respectively.

Investors have been on tenterhooks regarding economic recovery after State Bank of Pakistan (SBP) raised the key interest rate by 150 basis points, taking it to 13.75 percent to cool down the economy at the cost of growth amid rupee slide that has entered 14th session

Brokerage Arif Habib Ltd in a note said the market opened with a negative gap and remained volatile throughout the day on concerns over dwindling foreign exchange reserves and a rate hike by the central bank that dealt a blow to the sentiments.

Investors stayed on the sidelines until further clarity on the political as well as economic fronts, said the report and added that volumes also remained dry throughout the mainboard except for the 3rd tier stocks that saw a sizable trade.

Sectors that dragged the index down were banks (-108.8 points), technology (-74.8 points), cement (-72.1 points), fertiliser (-56.2 points), and chemicals (-25 points).

KSE-30 index also closed lower by 190.34 points or 1.18 percent.

Traded shares increased 51 million to 169.707 million from 118.986 million shares.

The trading value jumped to Rs5.462 billion from Rs3.576 billion. Market capital shrank to Rs6.990 trillion from Rs7.047 trillion. Out of 318 companies active in the session, 94 advanced, 208 retreated, while 16 ended without a change.

Muhammad Arbash, an equity dealer at Topline Securities, said the market continued Monday’s negative

momentum. “Ambiguity over IMF programme, unstable political conditions and higher secondary market yields kept the investors in check,” Arbash said

Major losers were SYS, UBL, FFC, LUCK, and HUBC, while TRG, POL, and HBL closed on a positive note. Sapphire Textile was the best performing stock as it gained Rs34.15 to end at Rs1,038.70 per share, followed by Gatron Industries, up by Rs27.99 to Rs434.99 per share.

Rafhan Maize took the worst hit of the day by losing Rs100 to close at Rs9,800 per share, followed by Sanofi-Aventis that fell Rs49.79 to Rs800.21 per share.

Ahsan Mehanti at Arif Habib Corp said stocks fell across the board as monetary tightening dismayed investors, while reports that a stalled IMF programme was expected to take longer than expected to resume also weighed on sentiment.

The falling rupee and the government’s indecision on reversing energy subsidies complicated the situation, he said.

Pakistan Refinery was the highest traded stock as it saw its 15.739 million shares changing hands.

The refinery closed higher by 46 paisas to Rs15.74 per share. It was followed by Silk Bank Ltd that recorded a turnover of 14.667 million shares. The script rose by seven paisas to close at Rs1.39 per share.