PSX feels pressure before monetary policy

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday remained under pressure as investors exercised caution ahead of the monetary policy announcement in mid-March and potential negotiations with the International Monetary Fund (IMF) for a new loan package.

In the morning, trading kicked off with a spike and the market climbed during initial hours. Buying activity was observed throughout the first half as investors cherished Prime Minister Shehbaz Sharif’s directives to open talks with the IMF for an Extended Fund Facility (EFF).

Bulls dominated proceedings until midday, immediately after which the KSE-100 index touched its intra-day high of 66,150.94.

Afterwards, market sentiment turned negative when investors weighed the potential impact of the upcoming monetary policy announcement and resorted to cautious trading.

They went for profit-booking during the final hour, pushing the bourse slightly into the negative territory. The index shed nearly 70 points and closed below the 66,000 mark.

“Stocks closed lower on investor speculation ahead of monetary policy announcement on March 18 and concerns over the public debt that reached Rs64.84 trillion, up 6.6% for Jul-Jan FY24,” said Arif Habib Corp MD Ahsan Mehanti.

“Falling rupee and uncertainty about IMF’s new terms for a long-term bailout to meet the debt servicing shortfall of $6 billion in FY24 played the role of catalysts in bearish close of the market.”

At close, the benchmark KSE-100 index recorded a slight decrease of 69.42 points, or 0.11%, and settled at 65,656.62.

Topline Securities Deputy Head of Sales Ali Najib, in his report, said that the “66,000 level is a hard nut to crack”.

“Pakistan equities initiated business on a positive note. The buying momentum can be attributed to the government’s focus on the economy reflecting PM’s directives to the finance ministry to start talks with the IMF on the ongoing standby arrangement, which will lead to the release of last tranche of $1.2 billion, and the potential new programme of around $6-8 billion,” he said.

However, investors chose to resort to some profit-taking above 66,000 points, which pushed the index to shed earlier gains.

Engro Corporation, Mari Petroleum and TRG Pakistan saw some selling as they lost 114 points, Topline added.

Arif Habib Limited (AHL) reported that there was “additional churning” around 66,000 before it moved to the new all-time highs.

“S&P Global says it is closely monitoring Pakistan’s external funding situation for the next fiscal year, and there is little doubt about the nation’s ability to fulfill its debt obligations through June. The key thing is securing the IMF funding,” said Yee Farn Phua, sovereign analyst at S&P in Singapore.

“Once the IMF programme is initiated and the government starts working on policies listed in the programme, bilateral partners will also come in for FY25,” AHL added.

JS Global analyst Mubashir Anis Naviwala said that profit-taking continued across the board. “The market opened in the green zone but was unable to sustain that momentum,” he said.

“Going forward, we recommend investors to adopt a buy-on-dips strategy in banking, exploration and production, and technology sectors,” the analyst added.

Overall trading volumes increased to 419.7 million shares against Tuesday’s tally of 396.6 million. The value of shares traded during the day was Rs18.3 billion.

Shares of 354 companies were traded. Of these, 163 stocks closed higher, 172 dropped and 19 remained unchanged.

Cnergyico PK was the volume leader with trading in 30.7 million shares, gaining Rs0.04 to close at Rs4.63. It was followed by Pakistan International Airlines with 28.1 million shares, gaining Rs0.71 to close at Rs14.51 and Pakistan Refinery with 28.04 million shares, losing Rs0.44 to close at Rs28.52.

Foreign investors were net buyers of shares worth Rs143.1 million, according to the NCCPL.

Published in The Express Tribune, March 7^th, 2024.

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