Bears tighten grip ahead of IMF review

KSE-100 index dives 753.26 points, settles at 64,048.44

KARACHI:

Bears remained in firm grip of proceedings at Pakistan Stock Exchange (PSX) on Wednesday as the KSE-100 index extended losses and recorded a decline of over 750 points due to concerns about the upcoming monetary policy and the fate of International Monetary Fund (IMF) programme review.

Earlier, trading began on a robust note when the index touched its intra-day high of 65,043.37 points. The market remained steady till midday with some ups and downs, but after that it took a dive.

Selling pressure prevailed as pessimistic investors pulled the index down in the absence of clarity about the outcome of IMF’s second review under the $3 billion standby arrangement (SBA).

Bearish sentiment deepened ahead of the monetary policy announcement on March 18.

Furthermore, car sales dropped to 9,709 units in February, marking an 8% month-on-month decline and the absence of major positive triggers led to across-the-board selling, taking the index to the intra-day low of 63,856.51.

The KSE-100 dipped over 750 points to close below the 64,000 mark.

“Stocks closed sharply lower amid uncertainty about the outcome of IMF’s second review under the $3 billion SBA and discussions over a new Extended Fund Facility,” said Arif Habib Corp MD Ahsan Mehanti.

“Dismal data of car sales that fell 41% year-on-year in Jul-Feb FY24 and uncertainty about the monetary policy announcement on March 18 played the role of catalysts in negative close at the PSX.”

At close, the benchmark KSE-100 index recorded a plunge of 753.26 points, or 1.16%, and settled at 64,048.44.

Topline Securities, in its report, said the day commenced on a promising note for the equity market when the KSE-100 index surged to the intra-day high of 65,043, marking a notable increase of 241.67 points in the morning session.

However, as the day unfolded, a shift towards profit-taking ensued, which swiftly turned into widespread selling across the board, it said. Consequently, the index struggled to maintain its momentum above the 65,000 level.

“The sudden surge in selling pressure can be attributed to the absence of significant positive triggers, with investors adopting a cautious stance amidst anticipation surrounding the upcoming IMF talks and the monetary policy announcement on March 18.”

Several sectors including exploration and production (E&P), automotive, banking and technology contributed to the index’s decline. Among these sectors, Mari Petroleum Company Limited, Pakistan Petroleum, Millat Tractors, Pakistan State Oil, TRG Pakistan and Habib Bank collectively shed 266 points, Topline added.

Arif Habib Limited (AHL), in its report, noted “another down day” for Pakistan stocks with the KSE-100 reverting to 64,000.

“KSE-100 is now back into the ‘general election gap’, which had been a stubborn resistance on the way up and is now expected to offer support,” it said. The report anticipated new all-time highs in the near term.

JS Global analyst Mubashir Anis Naviwala said that the bourse experienced a significant sell-off following Tuesday’s crash.

The KSE-100 index fluctuated between a high and low of 65,043 and 63,856. The market concluded at 64,048, down 753 points. “Investor participation remained notably low,” he said.

“Looking ahead, we advise investors to exercise caution at these levels and wait for opportunities during market dips,” the analyst added.

Overall trading volumes decreased to 252.8 million shares against Tuesday’s tally of 321.7 million. The value of shares traded during the day was Rs9.2 billion.

Shares of 329 companies were traded. Of these, 52 stocks closed higher, 257 dropped and 20 remained unchanged.

Cnergyico PK was the volume leader with trading in 19.9 million shares, losing Rs0.14 to close at Rs4.63. It was followed by The Bank of Punjab with 18.7 million shares, losing Rs0.15 to close at Rs6.02 and K-Electric with 14.4 million shares, losing Rs0.14 to close at Rs4.40.

Foreign investors were net buyers of shares worth Rs706.2 million during the trading session, according to the National Clearing Company of Pakistan Limited (NCCPL).

Published in The Express Tribune, March 14^th, 2024.

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