Bulls lose control in absence of cues

Investor sentiment flipped at the Pakistan Stock Exchange (PSX) on Thursday in contrast to the rally a day ago as bulls ceded control to bears, who pushed the market down by over 400 points. There was volatility in the bourse with many investors standing on sidelines in the absence of positive developments. Earlier, trading commenced on a dull note over the subdued mood of investors, caused by uncertainty about the transition to a caretaker government ahead of elections later this year.

The KSE-100 index gradually started falling in the latter half of the day when selling pressure grew across the board due to the lack of official confirmation from the International Monetary Fund (IMF) or the Ministry of Finance of the approval of a circular debt management plan. The negative sentiment was further fueled by the weakening of Pakistani rupee against the US dollar and resultantly the KSE-100 index touched an intra-day low of 47,626.74 points. “Stocks closed sharply lower on political noise amid uncertainty about the appointment of a caretaker govt after the National Assembly’s dissolution and the weak rupee,” said Arif Habib Commodities CEO Ahsan Mehanti.

“A surging industrial power tariff impacting corporate earnings and Iran’s refusal to suspend its notice to the government over the delay in Iran-Pakistan gas pipeline project also played the role of catalysts in bearish close of the market.” At close, the benchmark KSE-100 index registered a decrease of 419.26 points, or 0.87%, and settled at 47,808.34. Topline Securities, in its report, declared Thursday as a “puzzled day” where Pakistan equities commenced trading on a strong note and the KSE-100 index carried forward the bullish momentum, touching an intra-day high of 48,623 (+395 points; or 0.82%).

“Unexpectedly, in the latter half of the day, an acrossthe-board sell-off enveloped the market from all sides,” it said. Owing to that, the “index not only lost the earlier gains but went into negative territory and ultimately closed at 47,808 (-419 points; or 0.87%).” It pointed out that the selling spree could likely be attributed to “no official confirmation” yet from the IMF or the Ministry of Finance regarding approval of the circular debt management plan. During trading hours, the exploration and production (E&P), power, bank and technology sectors contributed negatively to the index as Oil and Gas Development Company, Hub Power, Pakistan Petroleum, Meezan Bank and Systems Limited lost 267 points cumulatively. On the flip side, Dawood Hercules Corporation, United Bank and Nestle Pakistan added 137 points collectively as they saw some buying interest, Topline added. Arif Habib Limited (AHL) reported that volatility emerged again around the key 48,000 level, which left open the potential of testing the 46,000-47,000 support.

Oil and Gas Development Company (-3.58%), Pakistan Petroleum (-4.29%) and Meezan Bank (-2.39%) were the key blue chips that were sharply lower. Power sector names, however, remained strong with Nishat Power (+7.5%) and Nishat Chunian Power (+5.47%) gaining significant ground. Bank Alfalah and Meezan Bank announced 1HCY23 earnings with both reporting the results in line with AHL expectations, it added. JS Global analyst Muhammed Waqar Iqbal commented that high volatility marked Thursday’s trading session as the KSE100 index started with a positive movement of +395 points but eventually ended on a negative note with a drop of 419 points at 47,808. “Going forward, we recommend investors to adopt a buy-on-dips strategy in the banking, E&P and textile sectors,” the analyst added. Overall trading volumes increased to 322.2 million shares compared with Wednesday’s tally of 312.3 million.

The value of shares traded during the day was Rs12.8 billion. Shares of 332 companies were traded. At close, 105 stocks closed higher, 209 declined and 18 remained unchanged. WorldCall Telecom was the volume leader with trading in 41.5 million shares, losing Rs0.03 to close at Rs1.20. It was followed by Bank Alfalah with 23.2 million shares, losing Rs1.03 to close at Rs40.40 and Oil and Gas Development Company with 22.03 million shares, losing Rs3.74 to close at Rs100.61. Foreign investors were net buyers of Rs441.6 million worth of shares, according to the NCCPL.