KARACHI: Stock trading commenced on a positive note in the outgoing week after the partial removal of subsidies on petrol and diesel.
The move to gradually eliminate fuel subsidies has paved the way for the resumption of the International Monetary Fund (IMF) loan programme as these measures were considered a prerequisite for the seventh review, according to Arif Habib Ltd.
The rupee also staged a recovery against the greenback and closed at 197.92 against the dollar. However, concerns over inflation, which reached a 28-month high of 13.8 per cent in May, and an uptick in the yields on treasury bills dampened the sentiments on the stock exchange.
Moreover, the jump in the profit rates on National Savings Schemes along with the expected hike in power prices sent alarm bells ringing.
As a result, the benchmark closed at 41,315 points, shedding 1,547 points or 3.6pc from a week ago.
Sector-wise negative contributions came from commercial banking (363 points) cement (309 points), fertiliser (163 points), technology and communication (124 points) and chemical (93 points).
Whereas, the sector that contributed positively was vanaspati and allied industries (one point).
Scrip-wise, negative contributors were Lucky Cement Ltd (141 points), Habib Bank Ltd (129 points), Fauji Fertiliser Company Ltd (87 points), TRG Pakistan (68 points) and Engro Polymer and Chemical Ltd (55 points).
According to AKD Securities, the stock market is still in a state of indecisiveness amid rising yields on treasury bills and growing political uncertainty. It said expected news about the IMF programme is bound to remove some of the gloom, but any delay will further affect the index.
“With rising interest rates and the government removing subsidies from petroleum products, the overall market outlook remains uncertain at best,” it said. “We retain our liking for refineries and the IT sector in the current backdrop and advocate for gradual accumulation in fundamental scrips with a longer-term focus.”
Published in Dawn, June 5th, 2022