[Politics] Stocks fall on political cues; volumes hit 20-month low

[Ga[M]er]

Stocks fall on political cues; volumes hit 20-month low
By Our CorrespondentMarch 15, 2022
Stocks on Monday buckled under selling pressure with participation shrinking to 20-month low, mostly owing to fears of a political meltdown as the apposition is seen escalating its assault on the government in the days to come, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Share Index shed 286.44 points or 0.66 percent to close at 43,366.89 points after swaying between a high of 43,767.77 and a low of 43,324.83 points during intraday trade.

Zafar Moti, a former director PSX, said low volumes and losses showed the market momentum became dependent of the political situation in Islamabad. “Compared to Russian-Ukrainian crisis, local political noise is proving more damaging for the capital market,” he said.

He said under the conditions of the IMF, fuel prices were likely to increase further and rupee was set to lose more value, denting the sentiment deeper in days coming ahead. KSE-30 index also lost 155.26 points or 0.91 percent to 16,820.79 compared with 16,976.08 points recorded in the last session.

Traded shares fell 34 million to 115.11 million from 149.29 million, while value dipped to Rs3.645 billion from Rs5.265 billion. Market capital narrowed to Rs7.394 trillion from Rs7.450 trillion. Out of 334 companies active in the session, 79 posted gains, 242 losses, while 13 remained unchanged.

Topline Securities said the PSX recorded the lowest volume in 20 months seen last time on June 5, 2020 when the market had recorded a turnover of 89 million shares.

Equities closed on a negative note amid lackluster activity as uncertainty arising from local politics and higher international commodities’ prices kept investor confidence in check, the brokerage added. Fertiliser sector came under the spotlight on increasing urea prices and as a result EFERT, FFC, and FFBL closed on a higher note.

The FFC increased urea price by Rs80/bag to pass on higher cost of manufacturing to consumers. Recently, there was a lot of noise regarding increase in urea bag price due to depleting urea inventory and possible smuggling and hoarding driven by skyrocketing international urea price. To note, urea availability remained a big challenge during peak Rabi season, as the product was selling at a significant premium due to illicit hoarding.

Possible shift towards WACOG, as increase in gas price is long due, will increase cost of production for fertiliser manufacturers. Therefore, another round of price hike in near future is highly likely. However, rising inflation concerns has created a lot of noise and pressure on the federal government, therefore, possibility of government intervention in price setting cannot be ruled out. Ahsan Mehanti, an analyst at Arif Habib Corp, said, dtocks closed lower amid thin trade on political uncertainty, surging government bond yields. and slump in global equities.

Economic uncertainty, hike in local power tariff and rupee instability contributed to the bearish close, Mehanti said. The highest increase was recorded in share prices of Bata (Pakistan) XD, which rose by Rs48.88 to Rs2,088.88/share, followed by Ismail Industries, which rose Rs20.43 to Rs549.99 per share. A major decline was noted in shares of Colgate Palm, which fell Rs97 to Rs2,200/share, followed by Sapphire Fiber that slipped by Rs57.01 to end at Rs720/share.

Analyst Mubashir Anis Naviwala at JS Research said profit-taking continued across the board throughout the day. “Going forward, we expect range bound activity to continue due to concerns over the economic outlook and geopolitical situation,” he said.

Flying Cement (R) was the volume leader with 11.63 million shares, followed by Pak Elektron (R) with 8.14 million shares. Stocks that recorded significant turnover included Ghani Global Holding, Telecard Limited, TPL Properties, WorldCall Telecom, Engro Fertilser, TRG Pak Ltd, Unity Foods Ltd, and Bank of Punjab.
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