Stocks post thin losses on economic fears

KSE-100 index sheds 53.53 points, settles at 65,603.09

KARACHI:

Pakistan Stock Exchange on Thursday endured highly volatile trading and closed slightly lower over investor concerns about economic recovery and their cautious stance ahead of monetary policy announcement in mid-March.

Earlier, trading began with a jump in the KSE-100 index, which touched its intra-day high of 65,874.15 points but soon volatility prevailed, restricting the market from posting further gains.

Investors adopted a wait-and-watch stance over economic uncertainty and ahead of the release of monetary policy by the State Bank on March 18.

Additionally, investors’ interest was undermined by pressure from the falling foreign currency reserves and concerns over IMF’s new conditions for taxation and power sector reforms for a long-term bailout package.

The lack of major positive developments kept the index in negative zone for most the day where selling pressure and profit-booking eroded all the gains. Moody’s upgrading of Pakistan’s banking sector outlook to stable from negative gave a little bit of boost to the bourse, helping it recover and close with marginal losses.

“Stocks closed lower on economic uncertainty,” said Arif Habib Corp MD Ahsan Mehanti. “Oil sector outperformed on strong financials and the revised refinery policy that supported plant upgrades,” he said.

“Uncertainty over the monetary policy announcement, weak rupee due to falling forex reserves and concerns over the IMF’s new terms for higher taxes and power tariff reforms before a long-term bailout played the role of catalysts in bearish close of the PSX,” he added.

At close, the benchmark KSE-100 index recorded a slight decrease of 53.53 points, or 0.08%, and settled at 65,603.09.

Topline Securities, in its report, said that the KSE-100 saw a volatile session. “On the political front, newly elected Prime Minister Shehbaz Sharif pledged to resolve the country’s crisis, with expectations that his cabinet members would be finalised within the next 48 hours,” it said.

In the cement sector, DG Khan Cement (+1.29%), Pioneer Cement (+0.92%) and Kohat Cement (+2.16%) closed positive, driven by the drop of $100 per ton in international coal prices, Topline said. Arif Habib Limited (AHL) reported that the “support zone at 65,000-65,500 was tested before closing above 65,600”. “Moody’s upgraded its outlook on Pakistan’s banking sector to stable from negative. Their baseline credit assessment is ‘Caa3’ for the largest five banks – NBP, Habib Bank, United Bank, MCB Bank and Allied Bank,” it said.

Moody’s forecast that Pakistan’s economy would return to a modest growth of 2% in 2024 after subdued activity in 2023 while inflation would fall to around 23% from 29% last year.

Following the recent consolidation around 66,000 and test of the near-term support, “the KSE-100 is now set to take out 66,000 in the coming sessions and advance towards new all-time highs”, AHL added.

Overall trading volumes decreased to 354.2 million shares against Wednesday’s tally of 419.7 million. The value of shares traded during the day was Rs14.4 billion.

Shares of 354 companies were traded. Of these, 145 stocks closed higher, 187 dropped and 22 remained unchanged.

Pak Elektron was the volume leader with trading in 31.1 million  shares, gaining Rs1.61 to close at Rs23.24. It was followed by Telecard Limited with 22.6 million shares, gaining Rs0.09 to close at Rs8.57 and Pakistan International Airlines with 21.6 million shares, gaining Rs1.09 to close at Rs15.60.

Foreign investors were net buyers of shares worth Rs974.6 million, according to the NCCPL.

Published in The Express Tribune, March 8^th, 2024.

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