KSE ends down on inflation worry after POL price hike

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KARACHI: Prices at the Karachi Stock Exchange (KSE) dropped on Monday as investors worried about the impact of increase in petroleum products prices on overall inflation, dealers said. 
“Investors remained concerned over†rising inflation after local POL prices†were raised by nine percent overnight,” said Ahsan Mehanti, a director at Arif Habib Investments.  The KSE 100-share index lost 60.13 points, or 0.57 percent, to close at 10,538.27 points. The KSE 30-share index shed 65.73 points, or 0.65 percent, to end at 10,089.18 points. Shares of 401 companies were traded, out of which 145 advanced, 248 declined, while eight remained unchanged. 
Analysts said that there was across-the-board profit-taking despite continuing foreign interest in oil and gas and fertiliser sector scrips. Rise†in circular debt†of energy sector also affected the market sentiment, they added. 
Hasnain Asghar Ali, a dealer at Aziz Fida Husein, said that the activity in low-priced stocks and snap rallies in various main board stocks on the whispers of offshore buying offered short term trading opportunities, but offloading in main board stocks by both local and foreign investors pulled the index down. 
“The recent increase in petroleum product prices invited severe criticism and threats of shutdown from local manufacturing and transport sectors because of its likely impact on inflation. Rise in government borrowing kept the threat of an interest rate hike on the high side, thereby keeping the leveraged companies highly vulnerable, mainly those facing tough time in managing debt.” 
Samar Iqbal, a dealer at Topline Securities, said that after announcement of results by major companies, investors preferred to stay on the sidelines. 
“Investors feared that increase in oil prices will lead to more inflationary pressures. With lacklustre activity, investors’ focus once again was seen towards the mid-cap stocks.” 
Absence of update on Margin Trading System kept even the resident participants confused, since the market movement in the previous week showed the inflows from local financial groups have dried up, said analysts. 
They added the formation of a committee to address the issue of ready-board leverage and various other matters may allow shares to trade at their potential with improved volumes, as various main board stocks have the potential to trade at improved multiples despite various threats on economic front. 
The ready market volume declined to 80.537 million shares from 103.969 million in the last trading session. Highest volume was witnessed in PSAF with trade of 7.508 million shares. The scrip lost 26 paisas to close at Rs7.59. It was followed by AMTEX with trade of 4.897 million shares. 
It lost Re1 to end at Rs5.27. Fatima Fertilizer was the third with trade of 3.953 million shares. It lost 04 paisas to finish at Rs9.50. 

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