Heavy profit-taking ahead of monetary policy

KSE-100 index slumps 1,039.34 points, settles at 62,773.72

KARACHI:

Pakistan Stock Exchange endured a significant fall of over 1,000 points on Monday, weighed down by apprehension over economic uncertainty, pending fiscal reforms related to circular debt and challenges faced by state-owned enterprises (SOEs).

In the morning, trading kicked off on a robust note, with the KSE-100 index registering its intra-day high at 63,792.84 points. However, as the day progressed, the index faced a downward trajectory, primarily influenced by the persistent geopolitical uncertainty and a soaring inflation. Additionally, investors exercised caution and opted to book profit before the announcement of State Bank of Pakistan’s (SBP) monetary policy. Resultantly, the index dropped below the crucial 63,000-point mark and hit the intraday low at 62,717.71 points.

Despite a strong opening, the bourse concluded the day on a bearish note with substantial losses. “Stocks fell across the board in the earnings season on investor concerns over economic uncertainty post-general elections amid pending fiscal reforms to curtail the circular debt and ailing SOEs,” said Arif Habib Corp MD Ahsan Mehanti.

“Geopolitical uncertainty and expected status quo in the SBP’s monetary policy amid high inflation played the role of catalysts in bearish close of the market.” At close, the benchmark KSE-100 index recorded a plunge of 1,039.34 points, or 1.63%, and settled at 62,773.72.

Topline Securities, in its report, commented that the negative PSX session could be attributed to investors opting to book profits before the announcement of monetary policy and foreign selling. “Mari Petroleum (-4.04%) announced its 2QFY24 result, posting earnings per share (EPS) of Rs137.64, up 65% year-on-year (YoY) but down 4% quarter-on-quarter (QoQ) with a cash dividend of Rs98,” it said.

“In Monday’s Monetary Policy Committee meeting, the SBP decided to keep the policy rate unchanged at 22%, in line with market expectations,” Topline added.

Arif Habib Limited (AHL), in its commentary, said that the seasonally weak period for the KSE-100 appeared to have begun. “The advancers-to-decliners’ ratio of 18:74 reflected a weak market with Engro Fertilisers (-4.14%), Pakistan Petroleum (-3.91%) and Mari Petroleum (-4.05%) being the biggest contributors to the downtrend,” AHL said, adding that Bank AL Habib (+1.33%), Pakistan Tobacco (+3.3%) and Unilever Pakistan Foods (+4.65%) supported the index.

Overall trading volumes decreased to 317.6 million shares against Friday’s tally of 412.8 million. The value of shares traded during the day was Rs10.7 billion. Shares of 348 companies were traded. Of these, 73 stocks closed higher, 253 dropped and 22 remained unchanged.

K-Electric was the volume leader with trading in 46.7 million shares, losing Rs0.3 to close at Rs4.85. It was followed by Pakistan International Airlines with 22.9 million shares, losing Rs0.41 to close at Rs9.93 and WorldCall Telecom with 21.5 million shares, losing Rs0.04 to close at Rs1.25. Foreign investors were net sellers of shares worth Rs2.1 billion, according to the NCCPL.

Published in The Express Tribune, January 30^th, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.