The Pakistan Stock Exchange (PSX) on Monday came under significantly downward pressure on account of institutional profit-taking in overbought stocks amid a global crude price slump and concerns about the fate of structural reforms post-elections in the country.
The day began at the intra-day high of 66,586.61 points, followed by a sharp decline in the KSE-100 index for the remainder of the session.
Dismal data on large-scale manufacturing (LSM) growth, which fell 4.1% year-on-year (YoY) in October 2023, and the government’s decision to further raise industrial gas tariffs to address the circular debt crisis were the major drivers behind the market’s downturn.
The bearish trend was mainly fuelled by stocks in the exploration and production (E&P), fertiliser and banking sectors. Consequently, the market fell below the 66,000 mark, touching intra-day low at 65,064.94 points less than an hour before close.
Profit-taking was evident throughout the session with the index fluctuating within a range of 1,521 points. Despite substantial losses, the market managed to conclude the day above the 65,000 level.
“Pressure was witnessed on institutional profit-taking in overbought stocks amid a slump in global crude prices and concerns over the fate of structural reforms post-general elections,” said Arif Habib Corp MD Ahsan Mehanti.
“Dismal data on LSM growth that fell 4.1% YoY in October 2023 and government’s decision on a further increase in industrial gas tariffs to ease the circular debt crisis played the role of catalysts in bearish close of the market.”
At close, the benchmark KSE-100 index recorded a dip of 925.35 points, or 1.4%, and settled at 65,204.68.
Topline Securities, in its report, wrote that in Monday’s session, profit-taking was evident. “Throughout the day, the index experienced fluctuations within a range of 1,521 points, reaching intra-day high of 66,586 and low of 65,064 points,” it said.
Negative contribution came from stocks in E&P, fertiliser and bank sectors as Pakistan Petroleum, Meezan Bank, Engro Corporation, Oil and Gas Development Company and Fauji Fertiliser collectively incurred a loss of 281 points.
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On the positive side, stocks such as K-Electric, Pakistan Telecommunication Company and Pakistan Services contributed gains of 80 points, Topline added.
Arif Habib Limited (AHL) commented “KSE-100 remained below resistance at 66,600, hitting intra-day high at 66,586 before declining sharply for the rest of the session.”
The biggest downside contribution came from Pakistan Petroleum (-2.53%), Meezan Bank (-2.69%) and Engro Corporation (-2.12%), it said, adding that major gainers were K-Electric (+11.26%), Pakistan Telecommunication Co (+7.5%) and Pakistan Services (+1.89%).
JS Global analyst Mubashir Anis Naviwala said that the KSE-100 index experienced widespread profit-taking on Monday.
“Going forward, we expect profit-taking to continue and recommend investors to view any downside as an opportunity to buy stocks in banking, cement and E&P sectors,” the analyst added.
Overall trading volumes increased to 1.89 billion shares against Friday’s tally of 1.74 billion. The value of shares traded during the day was Rs24.6 billion.
Shares of 381 companies were traded. Of these, 107 stocks closed higher, 264 dropped and 10 remained unchanged.
WorldCall Telecom was the volume leader with trading in 444.1 million shares, gaining Rs0.08 to close at Rs1.90. It was followed by K-Electric with 392.7 million shares, gaining Rs0.59 to close at Rs5.83 and Cnergyico PK with 205.4 million shares, gaining Rs0.15 to close at Rs5.90.
Published in The Express Tribune, December 19th, 2023.
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