Stocks undergo sharp correction on profit-taking

KSE-100 index tumbles 1,146.62 points, settles at 65,280.16

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday made a big correction, which was long overdue, as investors offloaded their holdings at higher valuations following a record-eclipsing rally in recent weeks.

Institutional profit-taking mounted pressure on the market, which tumbled nearly 1,150 points, amid concerns over potential delay and uncertainty about reform plans. The day commenced on a positive note as the KSE-100 index saw an initial surge, which led it to the intra-day high at 67,093.96 points. However, the momentum evaporated very quickly when bears took over as warnings by Fitch Ratings and renewed political volatility weighed on investors’ mind.

Selling pressure was also fuelled by highly leveraged positions and the elevated leverage rates at the PSX as well as a decline in remittances. There were also worries about failing to implement reforms agreed with the IMF.

Resultantly, the index descended to the intra-day low at 64,427.38 points later in the day. Sectors like fertiliser, technology, banks, and E&P faced significant selling pressure. Despite substantial losses, the index closed above the 65,000 mark as value-hunting emerged near the end of trading that provided some support.

“Pressure was witnessed at the PSX on institutional profit-taking as investors weighed Fitch warnings over the risk of delay and uncertainty about recent reforms and renewed political volatility due to the past record of failing to implement or reversing the reforms agreed with the IMF,” said Arif Habib Corp MD Ahsan Mehanti.

“High leverage and high leverage rates, and falling remittances also played the role of catalysts in bearish close of the market.” At close, the benchmark KSE-100 index recorded losses of 1,146.62 points, or 1.73%, and settled at 65,280.16.

Topline Securities wrote that Pakistan equities had an adventurous day where initially bulls resumed their march and assisted the KSE-100 index to reach intra-day high at 67,093. However, suddenly, bears entered the market with a bang as the index not only shed morning gains but also came off sharply at the intra-day low, it said.

Fertiliser, technology, bank and E&P sectors faced considerable headwinds where Engro Fertilisers, Fauji Fertiliser, TRG Pakistan, Meezan Bank and Mari Petroleum erased 368 points from the index.

Read PSX rebounds strongly on policy rate status quo

On the other hand, Pakistan Oilfields, Hub Power and Pakistan Telecommunication Company saw some buying interest as they added 61 points, Topline added.

Arif Habib Limited (AHL), in its report, said the PSX saw “a sharp move lower as the resistance at 66,600 held firm to set up a move towards support at 64,000.”

The biggest negative contributors were Engro Fertilisers (-4.01%), Fauji Fertiliser (-3.14%) and TRG Pakistan (-6.22%) while the major advancers were Pakistan Oilfields (+1.35%), Hub Power (+0.54%) and Pakistan Telecommunication Co (+9.08%), it added.

JS Global analyst Mubashir Anis Naviwala said that the bourse witnessed a sharp correction. “We advise investors to exercise caution and consider waiting for dips before making fresh buying.”

Overall trading volumes increased to 1.4 billion shares against Tuesday’s tally of 969.6 million. The value of shares traded during the day was Rs37.7 billion.

Shares of 412 companies were traded. Of these, 93 stocks closed higher, 304 dropped and 15 remained unchanged.

WorldCall Telecom was the volume leader with trading in 153.7 million shares, losing Rs0.13 to close at Rs1.65, followed by The Bank of Punjab with 106.3 million shares, gaining Rs0.24 to close at Rs6.29 and K-Electric with 90.1 million shares, losing Rs0.02 to close at Rs4.52. Foreign investors were net buyers of shares worth Rs530.9 million, according to the NCCPL.

Published in The Express Tribune, December 14^th, 2023.

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