Market watch : Stocks slump over changing political scenario

KSE-100 index plummets 1,133.78 points, settles at 61,020.06

KARACHI:

Pakistan Stock Exchange (PSX) on Thursday slid nearly 2% to around 61,000 points as the race among different political parties intensified for forming a new government, sparking worries among investors who refrained from building new positions.

In the morning, the trading session commenced on a dull note as selling pressure weighed on investor sentiment because of political uncertainty post-elections.

The bourse remained bearish throughout the day, touching the intra-day low at 60,926.85 points about an hour before the close of trading.

Furthermore, fears about the Economic Coordination Committee’s (ECC) decision on a further increase in gas prices kept investors at bay. The market continued to fall steeply, losing over 1,100 points at close.

“Stocks fell across the board amid political noise as new coalitions emerged for the PM’s slot,” said Arif Habib Corp MD Ahsan Mehanti.

“Default risks amid political instability, policy uncertainty and ECC’s approval of an increase in gas prices for industrial and residential consumers to recover an additional Rs242 billion played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded a drop of 1,133.78 points, or 1.82%, and settled at 61,020.06.

Topline Securities, in its commentary, declared the day as “a bolt from the blue”.

Pakistan equities began business on a positive note but the benchmark index started to come off sharply after news arrived that the Pakistan Tehreek-e-Insaf (PTI) was also engaging in talks with different parties to form the new government, it said. “This development knocked down the market’s positive momentum with a feather.”

Exploration and production (E&P), power, bank and fertiliser sectors contributed negatively to the index as Oil and Gas Development Company, Pakistan Petroleum, Hub Power, United Bank and Engro Corporation lost 438 points, Topline added.

Arif Habib Limited (AHL), in its report, noted that the KSE-100 turned negative as political temperatures rose. “Volatility is very high as news headlines dominate,” it said.

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Meezan Bank (+0.18%) declared 4QCY23 earnings per share (EPS) of Rs15, up 65% year-on-year (YoY), and dividend per share of Rs8. For the entire CY23, its EPS stood at Rs47.72, up 90% YoY and dividend came in at Rs20 per share.

Pakistan State Oil (PSO) reported 1HFY24 EPS of Rs16.51 vs loss per share (LPS) of Rs7.16 in the same period of last year. In 2QFY24, it recorded LPS of Rs30.12 vs LPS of Rs9.71 in the same period of the previous year amid higher inventory losses.

“February is again proving to be a weak seasonal period for the KSE-100,” AHL added.

JS Global analyst Mohammed Waqar Iqbal stated that the KSE-100 index experienced selling pressure throughout the day owing to the re-emergence of political uncertainty. “Broad-based selling was observed,” he said.

“Going forward, we recommend investors to view any downtrend as an opportunity to buy stocks in banking and fertiliser sectors,” the analyst added.

Overall trading volumes increased to 345.1 million shares against Wednesday’s tally of 303.9 million. The value of shares traded during the day was Rs11.9 billion.

Shares of 344 companies were traded. Of these, 85 stocks closed higher, 238 dropped and 21 remained unchanged.

K-Electric was the volume leader with trading in 33.3 million shares, losing Rs0.14 to close at Rs4.33. It was followed by Pakistan International Airlines Corp with 28.6 million shares, gaining Rs0.89 to close at Rs10.61 and Media Times with 22.4 million shares, gaining Rs0.61 to close at Rs1.98.

Foreign investors were net sellers of shares worth Rs125.99 million, according to the NCCPL.

Published in The Express Tribune, February 16^th, 2024.

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