Profit-taking pulls stock market down

KSE-100 index drops 524.43 points, settles at 64,298.01

KARACHI:

Pakistan Stock Exchange on Thursday gave up earlier gains and extended losses as investors opted for profit-booking following continued uncertainty over the circular debt reduction plan.

Continuing the previous day’s positivity, the market got off to a positive start and touched its intra-day high at 65,213.61 points but it could not sustain the gains in the second half.

Investor sentiment received a blow over uncertainty about the circular debt reduction plan coupled with speculation about the upcoming monetary policy announcement by the State Bank of Pakistan (SBP).

A selling spree emerged and the market succumbed to late-session profit-booking in oil and banking sectors, touching the intra-day low at 64,180.44.

The KSE-100 index dropped over 500 points and closed the day slightly above the 64,000 mark.

“Stocks closed bearish on reports of a government row over the Ministry of Energy’s proposed circular debt management plan to settle the power sector debt,” said Arif Habib Corp MD Ahsan Mehanti.

Banking sector remained under pressure on falling government treasury yields, he said. “Weak earnings in the auto sector, uncertainty about the SBP monetary policy amid high inflation and concerns over the power and gas sector circular debt, which reached Rs5.73 trillion, played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded a decrease of 524.43 points, or 0.81%, and settled at 64,298.01.

Topline Securities, in its report, declared Thursday as a “profit-taking day”. Continuing the previous day’s momentum, Pakistan equities commenced the day on a positive note, it said, but added that uncertainty about the circular debt reduction plan (due to rumours from different sources claiming acceptance and rejection while quoting the Ministry of Finance) dented investors’ confidence in energy stocks.

Resultantly, a selling spree was witnessed in them. Due to the selling headwinds, the index could not hold the 65,000 psychological level and closed the day on a negative note at 64,298 (-524 points, or 0.81%).

Oil and Gas Development Company, Pakistan Petroleum, Bank AL Habib, Hub Power and Pakistan State Oil contributed negatively with a loss of 510 points, Topline added.

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Arif Habib Limited (AHL), in its review, remarked “with the fall in yields in Wednesday’s T-bills auction, the market had a trigger to move through the resistance at 65,500”.

“The index’s inability to move higher now puts the support at 64,000 under threat and we are already very late in the bullish seasonal cycle, which ends with January,” it said.

Moves through 64,000 would be the first indication that the seasonally weak period for the KSE-100 would appear as per schedule, it added.

JS Global analyst Muhammad Shuja Qureshi noted that selling pressure in Oil and Gas Development Company and Pakistan Petroleum pushed the KSE-100 index down.

Uncertainty regarding the circular debt settlement plan dented the overall sentiment. However, selective stocks managed to close with gains, he added.

“Further dips in the market will be an opportunity to accumulate high dividend-yielding stocks,” the analyst added.

Overall trading volumes decreased to 460.7 million shares against Wednesday’s tally of 479.98 million. The value of shares traded during the day was Rs25.2 billion.

Shares of 353 companies were traded. Of these, 102 stocks closed higher, 233 dropped and 18 remained unchanged.

Oil and Gas Development Company was the volume leader with trading in 49.7 million shares, losing Rs10.56 to close at Rs135.31. It was followed by K-Electric with 48.97 million shares, losing Rs0.16 to close at Rs5.26 and Hascol Petroleum with 38.8 million shares, gaining Rs0.27 to close at Rs8.67.

Foreign investors were net sellers of shares worth Rs1.7 billion, according to the NCCPL.

Published in The Express Tribune, January 26^th, 2024.

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