Bearish run continues amid pre-budget jitters

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday continued its bearish momentum owing to across-the-board pre-budget uncertainty and profit-booking at high valuations.

In the morning, the market opened with a spike, touching its intra-day high of 73,079.18 points, but the positive sentiment started weakening soon as market participants were concerned ahead of the budget announcement.

An unstable political situation in the country due to wheat and fertiliser supply challenges also dragged the KSE-100 index down.

Reports about the International Monetary Fund (IMF) seeking an additional Rs1.3 trillion in taxes under a new loan programme dampened buying interest at the bourse, which touched its intra-day low of 72,358.19 after midday.

Pharma stocks were in the limelight as a leading manufacturer of Paracetamol in Pakistan announced its partnership with a renowned Chinese firm for the manufacturing of Active Pharmaceutical Ingredients (APIs).

Profit-booking at the end of the session erased gains, dragging the market down and keeping it below the 73,000-point mark.

“Stocks closed lower amid political noise and pre-budget uncertainty,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Government deliberations over structural reforms ahead of Pakistan-IMF negotiations for a new bailout package and reports of falling fertiliser and cement sales played the role of catalysts in bearish close at the PSX.”

At close, the benchmark KSE-100 index recorded a decline of 159.38 points, or 0.22%, and settled at 72,601.82.

Topline Securities, in its report, stated that Pakistan’s stock market wrapped up the trading day with a modest fall. “Throughout the session, the index displayed a mixed trend,” it said.

The decline in the index was mainly propelled by Dawood Hercules Corporation, Engro Fertilisers, MCB Bank, Lucky Cement and United Bank, which collectively erased 210 points.

Conversely, Service Industries, Fauji Fertiliser Company and K-Electric somewhat balanced this out by adding 97 points to the index, Topline added.

Arif Habib Limited (AHL), in its report, remarked that the PSX saw “further consolidation as prices dipped into the ‘liquidity void’ and remained contained below last week’s high”.

Pharma stocks remained well bid with GlaxoSmithKline Pakistan (+7.5%) and Citi Pharma (+7.5%) hitting their upper locks while cement and energy names continued to consolidate, it said.

“Holding above 72,300 will suggest that the low is in and the previous week’s high will be taken out to set up moves towards 74,000.”

Upside moves would likely be supported by renewed gains in cement and exploration and production (E&P) names, AHL added.

JS Global analyst Mohammed Waqar Iqbal said profit-taking continued across the board, though the market opened in the green zone and touched the intra-day high of 73,079 points.

“Going forward, we recommend investors to view any downside as an opportunity to buy stocks of fertiliser, cement and textile sectors,” the analyst added.

Overall trading volumes increased to 970.3 million shares against Tuesday’s tally of 621.8 million. The value of shares traded during the day was Rs23.5 billion.

Shares of 388 companies were traded. Of these, 149 stocks closed higher, 208 dropped and 31 remained unchanged.

WorldCall Telecom was the volume leader with trading in 407.9 million shares, gaining Rs0.23 to close at Rs1.51. It was followed by K-Electric with 68.03 million shares, gaining Rs0.28 to close at Rs4.68 and Hum Network with 56.1 million shares, gaining Rs1 to close at Rs9.03.

Foreign investors were net buyers of shares worth Rs124.2 million, according to the NCCPL.

Published in The Express Tribune, May 9^th, 2024.

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