PSX comes under pressure as gains wiped out

KARACHI:

Pakistan Stock Exchange (PSX) on Tuesday came under selling pressure which wiped out all the gains made earlier in the day, caused by weakening global crude oil prices, refinery closure and anticipation ahead of the State Bank of Pakistan’s (SBP) monetary policy announcement.

In the morning, trading began on a robust note, marked by the intra-day high of 71,846.63 points. The KSE-100 index’s surge was fueled by widespread buying of cyclical stocks, notably in the cement sector, following reports of a nine-year high current account surplus. However, profit-taking at the day’s peak triggered volatility in the market.

The shift in sentiment came in the wake of withdrawal of Shanghai Electric Power’s acquisition offer to K-Electric (KE) and uncertainty surrounding Pakistan-US relations after trade-boosting agreements between Islamabad and Tehran.

Additionally, the weaker Pakistani rupee kept the index in the red. Resultantly, the market reached its intra-day low at 71,338.42 towards the close of trading.

The index ended the day near the day’s low with thin losses, but managed to stay above the 71,000 mark.

“Stocks closed under pressure amid higher trading on weak global crude prices, reports of refineries’ shutdown and expectations of a prudent SBP policy announcement next week ahead of IMF loan talks in May,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Shanghai Electric Power’s withdrawal from the KE acquisition offer, uncertainty about Pakistan-US relations following Pakistan-Iran trade pacts and a weak rupee played the role of catalysts in negative close at the PSX.”

At close, the benchmark KSE-100 index recorded a decrease of 74.06 points, or 0.1%, and settled at 71,359.41.

Topline Securities, in its report, commented “the day goes to the cement sector. This market behaviour can be attributed to across-the-board buying of cyclical stocks, especially in the cement sector, in the backdrop of current account surplus of $619 million and in anticipation of 17-18% inflation for April 2024.”

At the day’s high, profit-taking was initiated in the market. Street expectations were scattered for the upcoming monetary policy from status quo to a reduction of 50-100 basis points.

Cement, banking and auto sectors contributed positively to the index where Lucky Cement, United Bank, Habib Bank, Millat Tractors and Maple Leaf Cement added 161 points. On the flip side, Meezan Bank, Faysal Bank and Oil and Gas Development Company Limited (OGDCL) saw some profit-taking as they cumulatively lost 135 points, Topline added.

Arif Habib Limited (AHL) wrote that the PSX saw a mixed session with price action staying below Monday’s high.

Lucky Cement (+2.17%), United Bank (+1.16%) and Habib Bank (+1.23%) were the biggest contributors to the index gains while Meezan Bank (-2.36%), Faysal Bank (-6.03%) and OGDCL (-1.11%) were the largest drags, it said.

“Cement was the standout sector with several stocks hitting their upper limits early in the session before coming off highs later in the day,” AHL added.

JS Global analyst Muhammad Shuja Qureshi said that Tuesday’s volatile session ended with a loss of 74 points. “More volatility is expected with gains in selective stocks,” he said.

Overall trading volumes increased to 655.9 million shares against Monday’s tally of 655.2 million. The value of shares traded during the day was Rs24.5 billion.

Shares of 371 companies were traded. Of these, 170 stocks closed higher, 179 dropped and 22 remained unchanged.

K-Electric was the volume leader with trading in 67.2 million shares, losing Rs0.23 to close at Rs4.05. It was followed by Pakistan International Bulk Terminal with 46.3 million shares, gaining Rs0.04 to close at Rs6.63 and Fauji Cement with 45.9 million shares, gaining Rs0.19 to close at Rs20.37.

Foreign investors were net buyers of shares worth Rs346.3 million, according to the NCCPL.

Published in The Express Tribune, April 24^th, 2024.

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