KARACHI – The local bourse underwent technical correction amid tough conditions, for the release of funds, set by US and IMF. Front line stocks from banking and fertiliser sectors faced renewed off-loading from local participants, both from corporate and retail circuits.
The KSE-100 lost 2.36 points to close at 12125.79 levels, while total volume and total stood at 86,487,579 and 5,899,162,764 respectively. However, presence of renewed buyers in growth and dividend yielding stocks did allow a smooth change of hands without denting the benchmark on a large scale. Moreover, low priced stocks kept the volumes ticking, as LOTPTA contributed almost 30 percent to the total turnover.
Conditions, imposed by IMF, though highly inflationary may restrict economic and financial matters from a further meltdown, said Hasnain Asgahar Ali at Aziz Fidahusein. He further said that, if revenues are collected and used efficiently and effectively, social and political repercussion might hamper smooth implementation of IMF and US conditions. Top tier stocks drew investor’s participation as POL, ENGRO, FFC and NBP were amongst the volume leaders. CPI inflation, for the month of February, was below expectation – standing at an annual 12.91 percent. This was triggered by a high base effect and lower food inflation. Better inflation number, healthy earnings expectation for the half and leverage product are likely to keep index northward journey afloat. Motioned developments may, therefore, not only restrict the upside due to expected volatility on macro, while developments might disallow the likely impact of leverage launch as the improved version of CFS and SLB is expected to provide desired and potential depth to the local bourse.
Strength can be capitalised for short term trade, while sell stays the call in various stocks unlikely to find smooth track of growth and sustainability in tougher economic and financial environment. Besides a high input, low export and local demand; caution stays the call for companies trading with high debt portfolio and sectors, proposed by FBR, for a likely increase in corporate tax.
The recently imposed conditions will add further pressure on inflationary numbers, thus keeping the likelihood of a further rise in local interest rate. Even the increase, deferred in the previous policy announcement, might add to an expected rise in policy announcement during the last week of running month, he added.
