Stocks flattish as inflation data rolls back early gains

Stocks ended flattish on Friday in tight trade weighed down by grim inflation data despite rupee recovery and a global crude oil surge, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index gained 89.52 points or 0.22 percent to 41,630.35 points after swinging between 41,744.86 and 41,535.50 points.

Darson Research said stocks got off to a strong start, but lost momentum as yearly inflation rate (New Base 2015-16) in June 2022 rose to 13- year high of 21.3 percent compared to 13.8 percent in May 2022.

This development pushed the index into the negative zone; however, fag-end buying propelled the equities into green zone, the brokerage said.

Analyst Ahsan Mehanti at Arif Habib Corp said stocks showed recovery amid surging global crude oil prices and speculations on likely release of $2 billion tranche under resumed IMF bailout programme.

Stronger rupee, surging forex reserves on China inflows, FBR’s surpassing the annual tax collection target of over Rs6.1 trillion, and easing fiscal crises kept the stocks afload, Mehanti said.

KSE-30 Shares Index also rose by 56.19 points or 0.36 percent to 15,861.23 points.

Traded shares, however, dropped by 38 million to 154.030 million from 192.897 million shares. The trading value decreased to Rs4.031 billion from Rs6.786 billion.

Turnover in the futures contracts improved to 46.626 million shares from 42.455 million shares.

Market capital expanded to Rs6.962 trillion from Rs6.956 trillion. As many as 167 companies gained, 137 posted losses, while 18 maintained the status quo.

Topline Securities said lacklustre activity was observed at the PSX as the index traded sideways with low volumes throughout the day.

CPI inflation for the month of June-22 clocked in at a 13-year high of 21.3 percent YoY taking FY22 average inflation to 12.1 percent.

EFERT and FFC increased by 2.15 percent and 1.5 percent, which can be attributed to EFERT increasing urea prices by Rs350/bag effective from Friday.

The highest increase was recorded in share prices of Allawasaya Textile, which surged Rs106.42 to Rs1,525.42 per share, followed by Sanofi-Aventis, up Rs80.12 to Rs1,148.48 per share.

To become the worst loser of the day Al-Abbas Sugar slumped by Rs16.30 to Rs272.50 per share, followed by Exide shed Rs13.29 to close lower at Rs265.13 per share.

Arif Habib Ltd said the fertiliser sector remained in the limelight due to price increases. “Investors hunted value stocks throughout the day,” it reported.

JS Research recommended investors to adopt a buy-on-dip strategy in the banking and E&P sectors.

Agritech Limited led the volumes chart with 19.751 million shares, followed by Azgard Nine with 9.112 million shares.

G3 Technologies, TPL Properties, Hum Network, Pakistan Refinery, SNGPL, Yousuf Weaving, Kohinoor Spinning and Unity Foods Ltd also contributed to the volumes.

Stocks witnessed a volatile month as the benchmark index nosedived 1,537 points to conclude the month June 2022 at 41,541 points.

Caution prevailed among market participants in the consequence of the federal government’s increasing the prices of petroleum products, the National Electric Power Regulatory Authority’s (NEPRA) approval to a massive increase of Rs7.91 per unit in the electricity tariffs, upsurge in t-bills yields, increase in National Savings (CDNS) profit rates on almost all national savings schemes up to 150bps.