Stocks battered by bleak outlook

Stocks on Wednesday got off to a cruising start, but a rather fluid political and dismal economic state of affairs took the wind out of the sails of an otherwise buoyant rally, traders said.

The KSE-100 Shares Index shed 641.21 points or 1.47 percent to 42,863.15 points after swinging between a day high of 43,642.39 and a low of 42,391.93 points at Pakistan Stock Exchange (PSX).

Darson Research said the local equity market came under immense selling pressure after opening with a positive gap and fell steeply after touching the day’s highest level.

However, a fag-end buying in usual suspects OGDC, HBL, and PPL trimmed some of losses, the brokerage said

In Darson analysts view, persistent rupee depreciation against dollar and IMF loan programme holdup were the major downers of the day.

Zafar Moti, a former director of PSX, said that the market continued Monday’s pattern as the rupee’s losses deepened, while oil prices also increased in the international market. “This government is not visible anywhere to help the situation,” he said.

Muhammad Waqar Iqbal, an analyst at JS Research, said the bourse remained under pressure throughout the day due to political noise, inflationary concerns, and the lack of clarity on the resumption of IMF programme. “Going forward, we expect range-bound activity to continue and recommend investors to stay cautious and wait until clarity emerges on the economic front,” he suggested.

KSE-30 Shares Index lost 210.06 points or 1.27 percent to 16,303.90 points.

Volume increased 105 million shares to 338.542 million from 233.857 million shares, while value jumped to Rs9.531 billion from Rs6.864 billion.

Turnover in the future contracts increased to 93.067 million shares from 72.891 million.

Market capital narrowed to Rs7.110 trillion from Rs7.220 trillion. Out of 359 active stocks, 47 managed to gain, 296 incurred losses, while 16 ended neutral.

Ahsan Mehanti, an analyst at Arif Habib Corp, said stocks fell across the board in the post earning season as investors weighed falling rupee, surging energy prices, and dismal cement and fertiliser sales in April 2022.

“Slump in global equities, uncertainty over terms of the IMF programme, and delays over approval of the $7.4 billion Saudi aid package killed investors' risk appetite,” Mehanti said.

The highest increase was recorded in the share prices of Gatron Industries, which rose by Rs26.70 to Rs382.80, followed by Ismail Industries that climbed Rs16.82 to Rs494.82.

Colgate Palmolive had a hardest landing as it fell by Rs97.86 to Rs2,100/share, followed by Nestle Pakistan that lost Rs50.01 to Rs5,750/share.

Topline Securities in a note said that after a sideways opening, the market slumped to an intraday low of 1,110 points over uncertain economic and political conditions.

“Moreover, higher international commodities prices and increasing dollar rate kept the investors’ confidence in check,” the brokerage reported.

According to Topline research, KSE-100 index companies’ profitability has grown by 37 percent year-on-year in 3QFY22, significantly higher than last 5-years and 10-years CAGRs of 12 percent and 17 percent, respectively.

The increase in profitability has largely been led by oil & gas exploration, oil & gas marketing, and banks – with profits growing by 77 percent year-on-year, 222 percent year-on-year, and 29 percent year-on-year, respectively, the brokerage added.

WorldCall Telecom was the volume leader with 31.405 million shares, followed by Cnergyico PK with 24.780 million shares.

Some notable volumetric support came from Pak Elektron, Pak Refinery, TRG Pak Ltd, Telecard Limited, Lotte Chemical, Hum Network XD, Ghani Global Holdings, and Unity Foods Ltd.