Bearish run continues on profit-taking

KARACHI:

Pakistan Stock Exchange (PSX) on Thursday faced an extended selling spree in a topsy-turvy session on account of institutional profit-taking amid a global crude price slump and decrease in Pakistan’s exports, which pushed the KSE-100 index below the 71,000-point mark.

Earlier, trading began at the intra-day high of 71,292.83 points, but soon the index took a deep dive. Though it recovered quickly afterwards, it could not sustain the gains and started falling again before midday.

The index recorded its intra-day low at 70,562.12 points in the middle of the session as investors resorted to profit-taking.

Despite the International Monetary Fund (IMF)’s approval of the final loan tranche of $1.1 billion, investor sentiment did not improve, which kept the market in the red.

The bearish trend was further fuelled by a 9% month-on-month (MoM) fall in exports to $2.35 billion while imports went down by 3% MoM to $4.72 billion.

Investors were already concerned about the State Bank of Pakistan (SBP)’s tight monetary policy due to inflation, geopolitical risks and pending fiscal measures.

“Stocks closed lower amid institutional profit-taking after a slump in global crude oil prices and dismal export data showing a 9% year-on-year (YoY) fall to $2.35 billion in April 2024,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Uncertainty about Pakistan-IMF talks for a new $8 billion loan, a weak earnings outlook amid surging energy prices, and reports of hurdles in the way of government’s privatisation policy played the role of catalysts in bearish close at the PSX.”

At close, the benchmark KSE-100 index posted losses of 444.91 points, or 0.63%, and settled at 70,657.64.

Topline Securities, in its report, said that during the day the KSE-100 index reached the intra-day high and low at 71,293 and 70,562 points, respectively. Technology and fertiliser sectors mainly contributed to the index’s decline with TRG Pakistan, Fauji Fertiliser Company, Engro Fertilisers, Engro Corporation and Systems Limited collectively losing 248 points, Topline added.

Arif Habib Limited (AHL), in its commentary, wrote that there was “additional downside for Pakistan equities, which have now fallen more than 3.7% from April’s peak”.

The Consumer Price Index (CPI) slowed in April to 17.34% for the fourth straight month, further pushing the real interest rate up and giving the State Bank room to start cutting the rate from June, it said. Cement stocks rallied post-CPI numbers with DG Khan Cement (+2.76%), Fauji Cement (+2.86%) and Maple Leaf Cement (+1.02%) gaining groud. “This is a trend that we anticipate will continue as the probability of rate cut now increases.”

Recent declines had put the KSE-100 in the support zone of 70,000 from where a reversal could be expected, AHL added. JS Global analyst Mohammed Waqar Iqbal said that the downtrend continued at the PSX as the KSE-100 lost 445 points.

“Going forward, we recommend investors to adopt a buy-on-dips strategy in cement, steel and textile sectors,” the analyst added.

Overall trading volumes decreased to 436.99 million shares against Tuesday’s tally of 560.6 million. The value of shares traded during the day was Rs19.02 billion.

Shares of 365 companies were traded. Of these, 103 stocks closed higher, 234 dropped and 28 remained unchanged.

K-Electric was the volume leader with trading in 30.1 million shares, losing Rs0.21 to close at Rs4.23. It was followed by WorldCall Telecom with 25.1 million shares, losing Rs0.02 to close at Rs1.26 and The Bank of Punjab with 20.2 million shares, losing Rs0.2 to close at Rs4.90. Foreign investors were net buyers of shares worth Rs792.7 million, according to the NCCPL.

Published in The Express Tribune, May 3^rd, 2024.

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