PSX suffers losses as SBP keeps tight policy

KSE-100 index dips 592.49 points, settles at 71,102.55

KARACHI:

Pakistan Stock Exchange (PSX) on Tuesday suffered significant losses near the end of the corporate earnings season as the State Bank of Pakistan (SBP) maintained a tight monetary policy amid inflation concerns, geopolitical risks and pending fiscal measures.

In the morning, trading began on a positive note as the KSE-100 index moved north and reached its intra-day high of 72,119.65 points immediately after mid-day. However, from that point onwards, the market swiftly reversed course.

The index began to decline rapidly due to the International Monetary Fund (IMF)’s condition of pursuing structural reforms in the energy sector. Additionally, lower-than-expected earnings in oil, cement and auto sectors further pulled the index down.

As a result, the market hit its intra-day low of 71,059.62 points just before the end of trading. Cement, steel and technology sectors were adversely impacted in the absence of the policy rate cut and due to dismal result announcements.

Despite recording substantial losses, the index managed to close above the 71,000 mark.

“Stocks closed bearish near the end of earnings season after the SBP maintained its tight monetary policy, keeping the policy rate unchanged owing to inflation, geopolitical risks and pending fiscal measures,” said Ahsan Mehanti, MD of Arif Habib Corp.

“IMF’s condition to pursue structural reforms in the energy sector and falling earnings in oil, cement and auto sectors played the role of catalysts in bearish close at the PSX.”

At close, the benchmark KSE-100 index posted losses of 592.49 points, or 0.83%, and settled at 71,102.55.

Topline Securities, in its report, said that a range-bound session was observed at the stock exchange. “Pressure was noted during the latter part of the day as result announcements depicted a decline in earnings,” it said. Systems Limited, United Bank, TRG Pakistan, Dawood Hercules and Engro Fertilisers lost ground, dragging down the index by 309 points, Topline added.

Arif Habib Limited (AHL), in its commentary, wrote that the SBP maintained its policy rate at 22%, which showed that there had been the status quo since June 2023, though some market participants were anticipating a rate cut.

Some 28 shares rose while 66 fell with Pakistan Petroleum (+2.55%), Bank Alfalah (+1.48%) and Fauji Fertiliser Co (+0.64%) being the biggest contributors to the gains, it said, adding that Systems Ltd (-3.75%), United Bank (-2.64%) and TRG Pakistan (-7.06%) were the biggest drags.

JS Global analyst Muhammad Shuja Qureshi said “selling pressure continued for the second consecutive day and the KSE-100 index lost 592 points.”

Cement, steel and technology sectors were the hardest hit as the expected rate cut did not materialise and some corporate announcements also fell short of expectations. “Investors should avail of dips to accumulate value stocks,” the analyst added.

Overall trading volumes decreased to 560.55 million shares against Monday’s tally of 613.3 million. The value of shares traded during the day was Rs25.7 billion.

Shares of 384 companies were traded. Of these, 113 stocks closed higher, 244 dropped and 27 remained unchanged.

WorldCall Telecom was the volume leader with trading in 47.7 million shares, losing Rs0.05 to close at Rs1.28. It was followed by Pace (Pak) Limited with 27.1 million shares, losing Rs0.2 to close at Rs3.29 and Pakistan Petroleum with 23.2 million shares, gaining Rs2.86 to close at Rs114.91. Foreign investors were net buyers of shares worth Rs824.8 million, according to NCCPL.

Published in The Express Tribune, May 1^st, 2024.

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