PSX tumbles on pre-election fears

Benchmark KSE-100 index loses 2,371.64 points, settles at 62,833.03

KARACHI:

In what could be termed a “bloodbath”, the Pakistan Stock Exchange (PSX) on Tuesday plunged over 2,300 points as investors hastily offloaded their holdings over pre-election uncertainty and concerns about a 50% drop in foreign loan inflows.

In the morning, the session commenced at the intra-day high of 65,132.03 points. However, the market, while taking cue from Monday’s bearish activity, quickly came under selling pressure as the KSE-100 index slumped on the back of institutional profit-taking ahead of year-end.

The sharp fall also reflected anxiety about the dim earnings prospects for leveraged stocks in the face of rising inflation and high leverage levels at the PSX.

Additionally, minimal activity on the part of foreign investors in recent days amid the year-end holiday season also contributed to the market’s volatility.

The index continued its downward trajectory throughout the day and touched the intra-day low at 62,360.78 points towards the close of trading.

Selling pressure enveloped several sectors which included banks, exploration and production (E&P), fertiliser, technology and oil marketing companies (OMCs).

The index slightly recovered in the final trading hour due to value-hunting by investors but still closed with a plunge of over 2,300 points.

“A record fall was witnessed at the PSX on pre-election uncertainty and concerns over the falling foreign loan inflows that dropped 50% to $416 million in November 2023,” said Arif Habib Corp MD Ahsan Mehanti.

“Investor concerns over a weak earnings outlook for leveraged stocks amid high inflation and high leverage at the PSX also played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded losses of 2,371.64 points, or 3.64%, and settled at 62,833.03.

Topline Securities, in its report, wrote that Pakistan equities commenced the day in line with Monday’s bearish momentum but the negative trend turned into a “bloodbath” as selling headwinds prevailed.

“The aforesaid ‘madness’ can be attributed to institutional profit-taking ahead of calendar year end and very muted activity on the part of foreigners due to the commencement of annual holiday season,” it said.

Read PSX nosedives by over 2,000 points

Bank, E&P, fertiliser, technology and OMC sectors faced considerable selling where MCB Bank, Oil and Gas Development Company, Dawood Hercules Corp, Systems Limited and Pakistan Petroleum erased 557 points from the index.

On the other hand, Pakistan Services, Meezan Bank and Rafhan Maize Products Company saw some buying interest as they added 40 points, Topline added.

Arif Habib Limited (AHL) commented there was a sharp fall with the KSE-100 down 3.64%. “Near-term support at 64k gave way as leverage traders were liquidated. There was one-sided action with advancers-to-decliners ratio coming in at 4:94,” it said.

Downside leaders were MCB Bank (-6.47%), Oil and Gas Development Company (-5.29%) and Dawood Hercules (-7.5%), AHL said, adding that index gainers were Pakistan Services (+4.13%), Meezan Bank (+0.41%) and Phillip Morris (+1.54%).

“No need to panic, corrections after huge moves are healthy for the market and new highs should be anticipated once support forms. Weekly support is seen in the 60-62k zone,” it added.

JS Global analyst Mubashir Anis Naviwala said that bearish spell continued in Tuesday’s session as well.

The KSE-100 touched a high and low of 65,132 and 62,361 points, respectively. It lost 2,372 points to close the day at 62,833. “We recommend investors to stay cautious at current levels and wait for dips,” the analyst added.

Overall trading volumes decreased to 1.51 billion shares against Monday’s tally of 1.89 billion. The value of shares traded during the day was Rs29.1 billion.

Shares of 386 companies were traded. Of these, 31 stocks closed higher, 351 dropped and 4 remained unchanged.

K-Electric was the volume leader with trading in 341.1 million shares, losing Rs0.53 to close at Rs5.30. It was followed by WorldCall Telecom with 176.03 million shares, losing Rs0.2 to close at Rs1.70 and Cnergyico PK with 131.7 million shares, losing Rs0.89 to close at Rs5.01.

Foreign investors were net buyers of shares worth Rs1.34 billion, according to the NCCPL.

Published in The Express Tribune, December 20^th, 2023.

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