The political economy is taking its toll on the country’s equity market where the risk-averse investors are playing cautiously to avoid a possible investment disaster arising out of the maiden democratic transition unfolding renewed fears and concerns with each passing day.
Monday, first working day of the week, saw the benchmark KSE 100-share index climbing beyond the 18,000 points psychological level and then nose-diving to a negative close.
The day, which marked the oath-taking of the hard-selected caretaker Prime Minister Mir Hazar Khan Khoso, witnessed the index shedding 1.21 points to close at 17,961.91 points against 17,963.12 points of Friday last week.
Also, the trading volume at the ready-counter was recorded lower, shrinking by 7.578 million shares to 153.669 million compared to 161.247 million of last trading session. The scrips traded devalued and reduced to Rs 4.847 billion as against Rs 6.034 billion last week. Of the total 318 scrips traded 133 appreciated, 155 depreciated while 30 remained unchanged.
The market capitalization remained almost flat at Rs 4.385 trillion.
“The initial enthusiasm proved to be short lived,” said the market analysts at Arif Habib Securities.
The investors’ participation remained modest with total volume standing at 153.6 million, they added. While the analysts dubbed them “penny stocks”, the PIA, Lotte PakPTA and TRG Pakistan dominated and appeared as volume leaders of the day. All the three stocks price below Rs 8.
Citing reasons the market observers kept politics, oath-taking of the interim premier, on the top. “With interim PM taking charge the investors would be keenly looking towards elections,” they viewed.
There are some who assign purely economic attributable factors to Monday’s upheaval on the volatile stocks market. Senior analysts like Ahsen Mehanti said the bullish and bearish trading on the day was because of the investors’ concern for “economic uncertainty” in the electioneering country.
However, the analyst saw consolidation continued in some blue chip stocks ahead of the close of the fiscal quarter.
“(The) Activity was led by cement and telecom stocks on strong valuations,” added Mehanti, who also is a director at Arif Habib Securities.
The investors’ concern for banking sector minimum profit payouts on rupee savings deposits despite the global markets’ rally on Cyprus bailout deal with the EU was also a catalyst for the bearish sentiments at KSE.
Other analysts said the equity investors were also watching closely at the central bank for its new monetary policy for next couple of months as well as the corporate results to be announced by the end of third fiscal quarter on the 231st of this month.
“Expectations regarding (the) corporate (results) is still strong,” they added.
The stocks analysts, however, seem to have consensus on the point that any political event that improves the perception regarding improvement in politico-economic stability in country would attract investors.
