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November 9, 2018

Stocks backslide as IMF bailout uncertainties bite again


November 9, 2018

Stocks on Thursday backslid as misgivings over International Monetary Fund (IMF) bailout once again clutched the market, triggering investors to book profits in blue chips, amid law and order concerns in the country, dealers said.

Topline Securities said the market experienced an uneventful trading session today as uncertainty remained over whether the country would be entering into an IMF program.

“This coupled with the decision of select stocks being excluded from the MSCI-EM Index just around the corner led some investors to partake in profit-taking,” the brokerage said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index lost 0.43 percent or 176.60 points to close at 41,367.38 points level, whereas KSE-30 Shares Index went down 0.61 percent or 121.90 points to end at 19,917.61 points level. Out of 358 active scrips today, 120 moved up, 219 retreated, and 19 remained unchanged. The ready market volumes stood at 224.675 billion shares, as compared with the turnover of 276.929 billion shares in the previous session.

Shumaila Badar, head of research from Ismail Iqbal Securities, said the market declined slightly because of some profit-booking. Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed lower amid thin trade in the post earnings season amid pressure in selected scrips across-the-board on investor concerns for outcome of ongoing political protests, IMF bailout talks and uncertainty over financial assistance from China.

“Uncertainty in global equities, foreign outflows, concerns for ongoing rupee depreciation, and slump in global crude oil price led to a bearish close,” Mehanti added. Since morning market moved in narrow band and was directionless because of the rally called by MMA to register protest against recent acquittal of Aasia Bibi (convicted in blasphemy case) by the Supreme Court. The share prices recorded slower movement throughout the session and sentiments were quite depressed. The ending saw more selling pressure which resulted in the index losing more than 170 points.

Another factor which turned the index red was the fresh adjustment in the value of rupee which closed above Rs 133 level. The dip according to analyst was the because of the IMF which arrived Pakistan to hold talks on new package.

An analyst said during the negotiations the international financial institution might ask more adjustment in the value of the currency. Since December dollar has been appreciated by almost 26 percent which accelerated the price cost of doing business, he added.

Fertiliser sector remained mix during the session as out of seven companies four closed in the green zone. The main reason behind the depressed tone of the fertliser sector was the government’s go-ahead to import of another 50,000 tons of urea. In September the government had allowed the import of 100,000 tons of urea to meet the demand.

The highest gainers were Jubile Life Insurance, up Rs30.99 to close at Rs650.99/share, and Island Textile, up Rs17.40 to finish at Rs1,577.40/share.

Companies that booked highest losses were Phillip Morris Pakistan, down Rs58.90 to close at Rs3,539.10/share, and Wyeth Pakistan Limited, down Rs34.50 to close at Rs1,225.50/share. Bank of Punjab recorded the highest volumes with a turnover of 31.857 million shares. The scrip gained Rs0.12 to close at Rs13.47/share. The lowest volumes were witnessed in Lotte Chemical, recording a turnover of Rs22.523 million shares. The scrip lost Rs0.12 to end at Rs18.74/share.

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