PSX slumps on rate, IMF review uncertainty

KSE-100 index dives 953.60 points, settles at 64,801.70

KARACHI:

In a highly bearish session, the Pakistan Stock Exchange (PSX) on Tuesday slumped over 950 points as a host of factors such as a weakening rupee, uncertainty ahead of monetary policy announcement, high inflation and the upcoming International Monetary Fund (IMF) review dampened investors’ spirit.

Although trading began on a positive note when the KSE-100 index reached its intra-day high at 65,859.63 points, profit-taking kicked in very soon, which triggered widespread selling and a gradual decline in the KSE-100 index.

Concerns over potential agreement on imposition of further taxes during government’s talks with the IMF for a new loan programme coupled with the impending monetary policy announcement pulled the market down. Additionally, the finance minister’s remarks about the challenges expected in FY24, alongside worries over a potential surge in industrial gas tariffs, undermined investor sentiment. Notably, fertiliser, exploration and production (E&P) and power sectors weighed heavily on the index.

Consequently, the index dropped below the 65,000 mark, touching the intra-day low at 64,664.66 points.

“Stocks closed bearish on weak rupee and uncertainty about monetary policy announcement on March 18 amid high inflation and IMF review beginning March 14,” said Arif Habib Corp MD Ahsan Mehanti. “Finance minister’s comments that FY24 will be a difficult financial year, concerns over a surge in industrial gas tariffs and uncertainty about the outcome of Pakistan-IMF talks for a new loan played the role of catalysts in negative close at the PSX.”

Read: PSX wipes out all gains, falls marginally

At close, the benchmark KSE-100 index recorded a plunge of 953.60 points, or 1.45%, and settled at 64,801.70.

Topline Securities Deputy Head of Sales Ali Najib, in his report, said at the day’s high, profit-taking was initiated and it subsequently converted into an across-the-board selling spree.

“The selling trend can be attributed to apprehensions associated with the forthcoming monetary policy announcement (scheduled for March 18) and the anticipation of further tax imposition in the aftermath of government’s dialogue for a new IMF programme,” he said.

Fertiliser, E&P and power sectors contributed negatively to the index as Dawood Hercules Corporation, Oil and Gas Development Company, Pakistan Petroleum, Hub Power and Engro Corporation lost 341 points, Najib added.

Arif Habib Limited (AHL), in its report, noted that there was a “strong downward session with 80 shares falling and only eight rising.”

“Dawood Hercules (-7.5%), Oil and Gas Development Co (-3.35%) and Pakistan Petroleum (-3.11%) were the largest drags on the index,” it said, adding that the prime minister picked a former banker as finance minister in a major shift towards technocrats to steer the economy and negotiate a new loan package with the IMF.

“Monetary policy committee meeting is scheduled to convene on March 18 with a strong possibility that it may consider kick-starting the interest rate reversal cycle by implementing a 100-basis-point cut,” AHL noted.

JS Global analyst Mubashir Anis Naviwala said that the bearish spell continued as the KSE-100 index lost 954 points.

“Going forward, we recommend investors to stay cautious at current levels and wait for dips for any fresh buying,” the analyst added.

Overall trading volumes decreased to 321.7 million shares against Monday’s tally of 548.8 million. The value of shares traded during the day was Rs10.9 billion.

Shares of 328 companies were traded. Of these, 57 stocks closed higher, 254 dropped and 17 remained unchanged.

Hascol Petroleum was the volume leader with trading in 29.3 million shares, losing Rs0.36 to close at Rs8.14. It was followed by Pakistan International Airlines Corp with 28.9 million shares, gaining Rs0.07 to close at Rs18.10 and Cnergyico PK with 25.5 million shares, losing Rs0.34 to close at Rs4.77.

Foreign investors were net buyers of shares worth Rs98.5 million, according to the NCCPL.

Published in The Express Tribune, March 13^th, 2024.

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