IMF loan uncertainty weighs on Pak stocks

As the earnings season nears its end, the Pakistan Stock Exchange (PSX) faced a marginal decline on Tuesday amid reports that the International Monetary Fund (IMF) board meeting agenda did not feature approval of a $7 billion loan for the country and uncertainty over securing $3-5 billion in external financing.

The trading day started on a strong note, with the KSE-100 index hovering around the psychological level of 78,000 points. It soon reached the intra-day high of 77,930.03 but the positive momentum could not be sustained.

The index began to fall rapidly, weighed down by political instability, rising imports and uncertainty about IMF’s conditions related to taxes and power subsidy.

The market subsequently dipped to the intra-day low of 77,460.39 points. In the latter half, selective buying in sectors like banks and oil and gas helped the index recover most of the losses. However, it still closed below the 78,000 mark.

“Stocks closed lower as the earnings season neared its end amid reports of IMF meeting agenda missing the $7 billion loan approval and uncertainty over sourcing the $3-5 billion external financing gap,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Political uncertainty, surging imports, uncertainty over IMF’s approval of taxes and power subsidy played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index posted a decline of 84.82 points, or 0.11%, and settled at 77,745.52.

Topline Securities, in its report, mentioned that Pakistan equities kicked off the day around the 78,000 psychological level. However in the latter half of the session, an inexplicable selling spree threw the benchmark index below 77,500 where value hunters rescued the market with some cherry-picking, it said.

Bank, fertiliser, power and technology sectors contributed negatively where Bank AL Habib, Fauji Fertiliser, Hub Power, MCB Bank and Systems Limited lost 186 points.

On the contrary, United Bank, National Bank of Pakistan and Millat Tractors cumulatively added 166 points due to some buying interest in them, Topline added.

Arif Habib Limited (AHL), in its report, observed that the KSE-100 continued to trade below 78,000.

Some 57 shares rose whole 42 fell with United Bank (+2.24%), National Bank of Pakistan (+7.07%) and Millat Tractors (+1.93%) being the biggest contributors to the index gains, AHL said, adding that Fauji Fertiliser (-1.2%), Hub Power (-0.89%) and MCB Bank (-0.86%) were the largest drags.

JS Global analyst Mohammed Waqar Iqbal commented that the bourse witnessed muted activity on Tuesday as investors awaited catalysts to lift market sentiment. “Some buying interest was noted in banking and select oil and gas stocks,” he said.

“Looking ahead, the market is expected to remain in a consolidation phase, offering opportunities to investors to build positions at dips in fertiliser, technology, cement, and oil and gas sectors,” the analyst added.

Overall trading volumes decreased to 380.7 million shares compared with Monday’s tally of 471.7 million. The value of shares traded during the day was Rs11.2 billion.

Shares of 446 companies were traded. Of these, 196 stocks closed higher, 183 fell and 67 remained unchanged.

Kohinoor Spinning Mills was the volume leader with trading in 101.9 million shares, gaining Rs0.94 to close at Rs10.21. It was followed by Yousuf Weaving Mills with 35.8 million shares, gaining Rs0.57 to close at Rs6.46 and Flying Cement with 17.5 million shares, gaining Rs0.62 to close at Rs11.58.

Foreign investors were net buyers of shares worth Rs43.1 million, according to the NCCPL.