Stocks stuck in slump amid political scares

Equity rout entered third day on Wednesday as investors continued to pull out on scares that a likely political scale-tipping was underway and economy was at stake, dealers said.

KSE-100 Shares Index lost 1.2 percent or 531.23 points to close at 43,691.68 points at Pakistan Stock Exchange (PSX). Traded volume and value for the day shrank 21 percent and 10 percent day-on-day to 363 million shares and Rs21.13 billion, respectively.

Topline Securities in a note said the index continued its downward trend owing to political uncertainty, economic headwinds, and margin calls.

After a slightly positive opening the market juggled between an intraday high of 201 points and low of 602 points, the brokerage said adding profit-taking was witnessed across the board.

TRG and SYS closed 6.9 percent and 7.5 percent down respectively, while financials stood firm where UBL, MEBL, BAHL and MCB cumulatively contributed 38 points to the index, the brokerage said.|KSE-30 shares index shed 1.32 percent or 244.75 points to close at 18,325.85 points.

An analyst at Pearl Securities said Election Commission’s shooting down ruling PTI’s plea against Yousuf Raza Gilani was another reason that added to the political uncertainty.

Another downer was federal cabinet’s approval to three crucial IMF-recommended bills especially the ones regarding withdrawal of corporate tax exemption and autonomy to State Bank of Pakistan, the analyst at Pearl Securities said.

Meanwhile, World Bank predicted Pakistan's economic growth for FY2022 at 1.3 percent and termed it "below potential growth", which also spurred economic concerns.

As many as 397 scrips were active of which 110 advanced, 271 declined and 16 remained unchanged.

Maaz Mulla at JS Global Capital said selling pressure was witnessed across the board at the PSX.

"Moving forward we expect bearish sentiments to continue because of political uncertainty.” Potential redemptions in mutual funds were likely to cause further selling pressure, he added. “Hence, we recommend investors to remain cautious in trading,” Mulla said.

Ahsan Mehanti at Arif Habib Corp said stocks closed lower amid thin trade on weak earnings outlook.

"Slump in global crude oil prices, government decision on discontinuing corporate tax exemptions, IMF conditions for major hike in power tariff, and uncertainty over outcome of IMF condition for SBP autonomy for policy on interest rates and exchange rate dragged the index down, Mehanti said.

Brokerage Arif Habib Limited in a report said anticipation of corprates losing tax exemption, increase in electricity tariff and deferment of increase in petroleum prices spurred selling across the board.

Bata Pakistan, up Rs37.43 to close at Rs2,170.28/share, and Colgate Palmolive, up Rs36.82 to close at Rs2,750/share were the top gainers of the day.

Rafhan Maize, down Rs500 to close at Rs9,700/share, and Pakistan Tobacco, down Rs69.75 to end at Rs1,500.15/share, ended up as the top losers.

TRG Pakistan was the most traded scrip with 38.16 million shares; however it shed Rs7.08 to close at Rs130.08/share.

Unity Foods Limited was second with a turnover of 25.04 million shares. It also lost Rs1.54 to close at Rs27.33/share.

Ghani Global was third recording a trade of 19.17 million shares. It gained Rs1.09 to finish at Rs2.3.93.