Loan approvals help PSX slash hefty losses

KSE-100 index dips 385.02 points, settles at 62,448.01

KARACHI:

The stock market fluctuated consistently in a volatile trading session on Wednesday as it continued its losing streak amid pre-election uncertainty and mounting pressure on investor confidence.

Earlier, trading commenced at the intra-day high of 63,261.05 points, fueled by late recovery in the previous session. However, investor concerns over high leverage levels at the PSX and the associated costs triggered the market’s downfall.

The downtrend continued well after midday when the KSE-100 index touched its intra-day low at 61,082.50 points.

In a dramatic turn of events, the index began recovering after hitting the lows owing to reports about World Bank’s approval of a $350 million financing under RISE-II and loan deals of $1.2 billion with the Asian Development Bank (ADB) for budget financing.

Moreover, attractive valuations of blue-chip stocks encouraged value-hunters, sparking buying interest in sectors such as power, exploration and production (E&P) and fertiliser. The positive shift facilitated the bourse in wiping off its losses before the day’s end.

“Pressure continued over pre-election uncertainty. Late-session recovery came on reports of World Bank’s approval of a $350 million financing under RISE-II and $1.2 billion worth of loan deals with the ADB for budget financing,” said Arif Habib Corp MD Ahsan Mehanti.

“Investor concerns over high leverage levels and its high costs at the PSX played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded losses of 385.02 points, or 0.61%, and settled at 62,448.01.

Topline Securities, in its report, wrote that Pakistan equities experienced a recovery day.

“The reason for the market’s action remained intact as continuous profit-taking and deleveraging of equity positions by investors ahead of calendar year-end kept sentiment subdued in early trading hours,” it said.

“However, attractive valuations of blue-chip stocks could not keep value hunters at bay, which translated into buying interest at the day’s low.”

Read PSX tumbles on pre-election fears

Subsequently, power, E&P and fertiliser sectors saw considerable buying interest where Hub Power, Mari Petroleum, K-Electric, Pakistan Petroleum and Engro Fertilisers positively contributed 179 points to the index.

On the flip side, Engro Corporation, Oil and Gas Development Company and Lucky Cement faced selling headwinds as they cumulatively lost 155 points, Topline added.

Arif Habib Limited (AHL) commented that a highly volatile session saw continuous sell-off for the KSE-100 before recovery in the second half of the day.

“The market saw intra-day low of -2.79% before buying set in just above the 61k level,” it said.

Key decliners were Engro Corporation (-2.26%), Oil and Gas Development Company (-2.38%) and Lucky Cement (-1.98%) while the major gainers were Hub Power (+1.31%), Mari Petroleum (+2.54%) and K-Electric (+8.87%).

“A low has formed at 61k that will require moves back above 64k,” AHL added.

Overall trading volumes increased to 1.19 billion shares against Tuesday’s tally of 1.51 billion. The value of shares traded during the day was Rs26.04 billion.

Shares of 362 companies were traded. Of these, 107 stocks closed higher, 246 dropped and nine remained unchanged.

K-Electric was the volume leader with trading in 280.8 million shares, gaining Rs0.47 to close at Rs5.77. It was followed by WorldCall Telecom with 211.1 million shares, losing Rs0.15 to close at Rs1.55 and Cnergyico PK with 54.4 million shares, losing Rs0.12 to close at Rs4.89.

Foreign investors were net sellers of shares worth Rs767.5 million, according to the NCCPL.

Published in The Express Tribune, December 21^st, 2023.

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