Monetary policy concerns drag PSX down

KSE-100 index sheds 484.94 points, settles at 63,813.06

KARACHI:

Investor speculation about the upcoming monetary policy and concerns over the energy sector circular debt took their toll on the Pakistan Stock Exchange (PSX) on Friday where the KSE-100 index shed nearly 500 points.

In the morning, the trading session got off to a healthy start despite a downbeat industrial earnings outlook and the index soon touched its intra-day high at 64,534.30.

However, pre-poll uncertainty unnerved investors, who resorted to profit-selling in the second half, dragging down the market to the intra-day low at 63,743.40 towards the close of trading.

Exploration and production, banking and fertiliser sectors mainly contributed to the downtrend. The bourse lost nearly 500 points and closed below the 64,000 mark.

“Stocks fell sharply on pre-poll uncertainty and investor concerns about the unresolved power sector circular debt crisis as the debt surged Rs2.55 trillion from Jul-Dec 2023,” said Arif Habib Corp MD Ahsan Mehanti.

“Uncertainty about the IMF’s approval of a Rs1.27 trillion circular debt settlement plan and a weak industrial earnings outlook amid surging gas tariff played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded a decrease of 484.94 points, or 0.75%, and settled at 63,813.06.

Topline Securities, in its report, commented that the KSE-100 index opened on a positive note and rose to the intra-day high of 236 points. However, selling pressure was observed in the second half on account of profit-taking by investors in bank stocks ahead of the monetary policy committee meeting on Monday.

Fauji Fertiliser Company declared its 4Q2023 results, where it posted earnings per share of Rs5.86 along with dividend per share of Rs4.1. However, investors reacted negatively to the result announcement as the company’s stock closed 2.5% lower.

Oil and Gas Development Company, Habib Metropolitan Bank, Indus Motor, Allied Bank and Lucky Core Industries contributed 154 points to the index. On the flip side, Mari Petroleum, Fauji Fertiliser Co, Meezan Bank, Habib Bank and Bank AL Habib lost 226 points, Topline added.

Read PSX recoups losses, surpasses 64,000 mark

Arif Habib Limited (AHL), in its commentary, wrote “week-on-week, the bourse gained 0.84%, having been +3.05% at the week’s high of +65k”.

The advancers-to-decliners’ ratio was skewed towards the latter at 22:71 with Mari Petroleum (-3.25%), Fauji Fertiliser Company (-2.45%) and Meezan Bank (-1.49%) among the biggest drags on the index, it said.

Oil and Gas Development Company (+4.48%), Habib Bank (+1.75%) and Indus Motor (+1.79%) were the biggest contributors to the gains, AHL added.

JS Global analyst Muhammad Shuja Qureshi said that the index lost 485 points to close below the 64,000 mark, at 63,813.

Oil and Gas Development Company was the most active exploration and production stock, gaining 4.5% with a turnover of 31 million shares, the analyst added.

Overall trading volumes decreased to 412.8 million shares against Thursday’s tally of 460.7 million. The value of shares traded during the day was Rs16.2 billion.

Shares of 342 companies were traded. Of these, 99 stocks closed higher, 221 dropped and 22 remained unchanged.

Pakistan International Airlines was the volume leader with trading in 66.2 million shares, gaining Rs1 to close at Rs10.34. It was followed by K-Electric with 47.1 million shares, losing Rs0.11 to close at Rs5.15 and Oil and Gas Development Company with 31.1 million shares, gaining Rs6.06 to close at Rs141.37.

Foreign investors were net sellers of shares worth Rs2.8 billion, according to the NCCPL.

Published in The Express Tribune, January 27^th, 2024.

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