Stocks dragged down by nearly 780 points over investor pessimism

KARACHI:

The Pakistan Stock Exchange (PSX) on Monday dived into the red zone as the KSE-100 index was marked by collective pessimism over the latest round of rupee depreciation coupled with disclosure of President’s statement regarding refusal to sign the Pakistan Army and Official Secrets Bills law.

The market began on a positive note touching an intra-day high of 48,234.25 points but soon the bourse began its downward trajectory.

The benchmark index, after midday, succumbed to selling pressure owing to lack of positive triggers which kept investors cautious throughout the trading session.

The fresh depreciation prompted bearish sentiment. Furthermore, investors’ concerns for dismal data of $809 million current account deficit, weak earnings outlook and speculations of further hikes in industrial power tariff kept the market under pressure.

Announcement of the Refinery Policy defeated investor incentives as they were lower than expectations.

In addition, profit-taking in other sectors prevented the index from staying in the green and the KSE-100 index was unable to maintain its 48,000- point mark and touched an intra-day low of 47,432.71 points during final hour to close the day in red.

“Stocks fell across the board amid uncertainty over outcome of President alarming disclosure on refuting to signing of the Pakistan Army and Official Secrets Bills laws approved.”” said Arif Habib Commodities CEO Ahsan Mehanti.

“Slump in rupee, investor concerns for dismal data of $809m current account deficit in Jul’23 and weak earnings outlook amid expected further hike in power tariff and POL prices played a catalyst role in bearish close.”

At close, the benchmark KSE-100 index registered a decrease of 770.54 points, or 1.6%, and settled at 47,447.95.

Topline Securities in its report, stated that Monday was “a day full of pessimism.”

Pakistan Equities commenced the week with a modestly positive opening only to succumb to a rapid selling spree shortly after the market opened, it said adding that unfavourable factors weighed heavily throughout the day.

The Current Account, which had shown a surplus for four consecutive months, faced a deficit of $0.8 billion. Concurrently, there was a consistent decline in the value of the Pakistani Rupee against US Dollar, with the day's closing rate in inter-bank trading at 297.13, reflecting a further 0.45% decrease.

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The announcement of the Refinery Policy came with incentives that were lower than expected by investors, and there has been no update thus far regarding the Circular Debt Management Plan.

These factors are likely contributors to the bearish trend observed, Topline added.

Arif Habib Limited (AHL) stated that the 46-47k support zone is now within touching distance following a weak Monday session.

“The main contributors to the declines were United Bank (-3.57%), Oil and Gas Development Company (-2.87%), and Habib Bank (-2.66%),” it said, adding that in the FTSE Rebal, Pakistan Petroleum has been moved from Mid to Small Cap, MCB Bank has been moved from Small Cap to Micro, and Meezan Bank has been added to Micro Cap with an effective date of September 15.

JS Global analyst Muhammed Waqar Iqbal commented that the bourse remained under pressure throughout the day due to a lack of positive triggers.

Profit-taking was witnessed across the board, he added.

“Going forward, we recommend investors to avail any downside as an opportunity to buy in the Construction and Export-oriented sectors,” the analyst said.

Overall trading volumes decreased to 211.23 million shares compared with Friday’s tally of 254.8 million. The value of shares traded during the day was Rs7.07 billion.

Shares of 323 companies were traded. At close, 50 stocks closed higher, 253 declined and 20 remained unchanged.

WorldCall Telecom was the volume leader with trading in 51.4 million shares, gaining Rs0.02 to close at Rs1.27. It was followed by K-Electric with 8.4 million shares, gaining Rs0.05 to close at Rs2.23 and Oil and Gas Development Company with 7.3 million shares, losing Rs2.85 to close at Rs96.44.

Foreign investors were net buyers of Rs388.9 million worth of shares, according to the NCCPL.