Stocks fall amid inflation, rate hike fears

Stocks declined on Monday as investors worried about rising inflation and the possibility of a policy rate hike, dealers said.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index lost 0.4 percent or 192.61 points to close at 47,478.61 points. The highest index of the day remained at 47,733.51 points while the lowest level of the day was recorded at 47,399.28 points.

“Stocks closed lower on falling rupee resulting in surging inflation,” said Ahsan Mehanti, an analyst at Arif Habib Corp. “Surging industrial power tariffs, political noise on likely parliamentary election delays and civil unrest on government relief delays played a catalytic role in the bearish close.”

The KSE-30 index, which tracks the performance of 30 blue-chip companies, fell 0.6 percent to 16,877.28 points. Out of 314 companies traded, 202 declined, 91 advanced and 21 remained unchanged.

Traded shares decreased by 8 million shares to 184.138 million shares from 192.036 million shares. The trading value decreased to Rs6.465 billion from Rs6.528 billion. Market capital narrowed to Rs7.060 trillion against Rs7.091 trillion. Out of 314 companies active in the session, 91 closed in green, 202 in red and 21 remained unchanged.

Profit-taking was also seen in the market as some investors sold their holdings amid rumors of a policy rate increase. The central bank is expected to announce its monetary policy decision in September.

“Investors opted to dispose of a fraction of their positions,” said Naveed Nadeem, an analyst at Topline Securities. “This strategic choice not only prompted the market to relinquish some of its previously accrued value but also culminated in the aforementioned index transitioning into unfavorable terrain.”

Prominent influence on the index was exerted by OGDC, PPL, LUCK, TRG & HUBC, causing a collective decline of 139.71 points. Conversely, HMB, POL & KAPCO countered with a gain of 66 points.

The highest increase was recorded in Pak Tobacco, which rose by Rs24.75 to Rs718 per share, followed by Al-Abbas Sugar, which increased by Rs18.50 to Rs500 per share. A significant decline was noted in Rafhan MaizeXD, which fell by Rs75 to Rs8,300 per share, followed by Sanofi-Aventis, which decreased by Rs56.69 to Rs711 per share.

The start of the trading week was lackluster, with the KSE-100 index experiencing a decline of -0.43% as it lost ground, brokerage Arif Habib Ltd. said in a note.

“The price movement continues to align with the projected scenario of testing the support zone of 46k-47k throughout the week, from which a potential recovery is anticipated,” it said.

“Observing moves above the 48k mark would serve as an initial indication that the market might have reached its bottom, signaling a potential reversal in the market’s trajectory.”

K-Electric Ltd. remained the volume leader with 19.236 million shares which closed lower by 13 paisas to Rs2.02 per share. It was followed by Bankislami Pak. with 16.660 million shares, which closed higher by 40 paisas to Rs15.25 per share.

Other significant turnover stocks included Kohinoor Textile, WorldCall Telecom, Nishat Chun Pow, Kot Addu Power, Oil & Gas Dev., JS Bank Ltd, TPL Properties and Hum Network. Shares’ turnover in the future contracts decreased to 51.241 million shares from 236.345 million shares.