Daily Times

KARACHI: Pakistan equities closed flat on Monday with benchmark KSE100 index settling below 44,000 level following Rupee Devaluation in the interbank market.

Market opened with news of third round of Pak Rupee devaluation in the interbank market, with PKR/USD crossing PKR121.5 against greenback. Positive momentum was seen in early trading hours as Pak Rupee lost value by around 4 percent against dollar in the interbank market.

“Stocks closed lower amid mid session pressure on rupee devaluation weakening earnings outlook for the auto, cement and steel sector. Banking stocks outperformed on surging banking spreads. Investor concerns for economic uncertainty, falling US crude prices, rupee uncertainty and foreign outflows played a catalyst role in bearish close”, commented Ahsan Mehanti, senior analyst.

Export-oriented sectors such as Textiles +1.3% and sectors that have dollar-linked revenues such as E&P +1.1% and Power 1.5% came in limelight and traded higher. Financials +0.7% too maintained their upward momentum on expectations of earlier and more aggressive rise in the interest rates going forward.

On the flip side, Cements -3.2%, Steels -4.9%, Autos -1.4% succumbed to profit taking as sharp deval hurts demand, increases potential exchange losses and/or costs for these sectors.

Engro Corp ENGRO PA +2.3% withered the storm as investors cheered company’s announcement over the weekend on unearthing the first layer of indigenous coal from Thar Coal Block II. The project comes under Sindh Energy Coal Mining Company (SECMC) and is currently 3-6 months ahead of schedule.

BOP, PAEL, KEL, FCCL and DGKC remained volume leaders with total cumulative volumes of 52mn shares. Total traded volumes/values was down 30 percent /14 percent, respectively.

Amongst the major sectors, Cement & Engineering Sectors withheld 152points from index whereas Commercial Banks & E&Ps added 142 points to the index.

Equity analysts expect range bound market in the near-term. With 2018 net foreign outflows standing at $86 million, it remains to be seen if the last 6 months’ cumulative PKR devaluation of 15% would now help change the direction.

Published in Daily Times, June 12^th 2018.