Despite initial spike, PSX undergoes correction

KSE-100 index loses 228.26 points, settles at 60,502

KARACHI:

As Pakistan’s stock market broke record high levels one after another over the past couple of weeks, investors eventually took a pause and resorted to some profit-booking on Wednesday.

It came following World Bank Vice President for South Asia Martin Raiser’s remarks that Pakistan’s economy was stuck in a low-growth trap, citing that the culture of corruption, landlords and industrialists were resisting reforms. Consequently, the KSE-100 index experienced a correction of over 200 points.

Earlier, the market got off to a positive start with a sharp spike that took the index to its intra-day high at 61,555.83 points. However, selling pressure grew at that level, which wiped out all earlier gains and pulled the index to the intra-day low at 60,328.17 immediately after midday.

The index remained volatile with market players worried about the government’s decision to raise industrial gas tariffs amid a circular debt crisis.

“The market witnessed pressure after the World Bank cautioned about the economic crisis linked to deep-seated vested interests of the elite and political opportunism hindering foreign investment,” said Arif Habib Corp MD Ahsan Mehanti.

“Government’s decision to raise industrial gas tariffs amid Rs4.5 trillion in energy sector circular debt, reports of dismal data on cement sales, concerns about unsustainable debt and painful domestic debt restructuring played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded a modest loss of 228.26 points, or 0.38%, and settled at 60,502. Topline Securities, in its report, wrote that the Pakistan Stock Exchange (PSX) underwent some correction, concluding the session at 60,502 with a decrease of 228 points.

“Initially, there was a positive start with a rally that propelled the index beyond the 61,000 mark for the first time. However, within an hour of trading, the emergence of selling pressure led to a reversal, erasing the earlier gains and taking the index in negative territory for the rest of the session,” it said.

Read: PSX soars to new peak above 60.5k

The index showed significant volatility throughout the day. It reached an intra-day high of 61,555.84, marking an increase of 825.57 points, and a low of 60,328.18, reflecting a decline of 402.09 points, Topline added.

Arif Habib Limited (AHL) observed that the KSE-100 index closed in the red following eight consecutive days of gains on the back of selling pressure. It saw an intra-day high of 61,555 points, +1.36%.

Positive contributors were Millat Tractors (+2.61%), Pakistan Services (+3.91%) and Engro (+0.70%). In contrast, Habib Bank (-3.11%), Hub Power (-0.81%) and Meezan Bank (-1.62%) were the major drags, AHL added.

JS Global analyst Mohammed Waqar Iqbal said that the market opened on a positive note, but profit-taking by investors dragged it down. “Going forward, we recommend investors to adopt a buy-on-dips strategy in the cement, banking and E&P sectors,” the analyst added.

Overall trading volumes decreased to 692.2 million shares compared with Tuesday’s tally of 779.7 million. The value of shares traded during the day was Rs27.04 billion.

Shares of 387 companies were traded. Of these, 143 stocks closed higher, 231 dropped and 13 remained unchanged.

The Bank of Punjab was the volume leader with trading in 50.1 million shares, gaining Rs0.16 to close at Rs5.61. It was followed by Cnergyico PK with 35.7 million shares, staying unchanged at Rs4.60 and Pakistan Refinery with 35.4 million shares, losing Rs0.46 to close at Rs25.01. Foreign investors were net buyers of shares worth Rs1.19 billion, according to the NCCPL.

Published in The Express Tribune, November 30^th, 2023.

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