PSX under pressure after long bullish spell

KSE-100 index declines 258.34 points, settles at 75,084

KARACHI:

Pakistan Stock Exchange (PSX), with the commencement of new week, snapped its rising spree and came under significant selling pressure owing to over-leveraged investor positions, futures contract rollover and pre-budget uncertainty, resulting in a drop of over 250 points.

In the morning, the KSE-100 index had a robust start as it spiked to the intra-day high of 75,618.49 points. However, it quickly began to plummet as uncertainty surrounded the adoption of structural reforms under a new International Monetary Fund (IMF) loan programme.

There were also reports about a high tax collection target of Rs12.4 trillion for the next fiscal year and concerns over negotiations regarding the outstanding dues of Chinese power plants set up as part of the China-Pakistan Economic Corridor (CPEC).

The downward trajectory of the market was largely attributed to profit-taking by investors. Consequently, the market fell below the 75,000 mark, reaching its intra-day low at 74,734.24 points after midday.

However, the index rebounded and resumed its march upwards. It closed just above the 75,000 barrier with modest losses.

“Stocks closed under pressure amid over-leveraged positions and futures contract rollover,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Lack of clarity ahead of budget, uncertainty over structural reforms under a new IMF bailout package with reports of a new tax collection target of Rs12.4 trillion and investor concerns over the outcome of negotiations on Chinese IPPs’ dues played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded a decrease of 258.34 points, or 0.34%, and settled at 75,084.

Topline Securities, in its report, commented that Pakistan’s equity market experienced a consolidation day. “The KSE-100 index reached its intra-day high of 75,618 (+276 points) and intra-day low of 74,734 (-608 points). At these levels, profit-taking was observed,” it said.

Fertiliser, banking and IT sectors made positive contributions where Systems Limited, Meezan Bank, TRG Pakistan and Fauji Fertiliser Bin Qasim collectively added 122 points. Conversely, Engro Corporation, MCB Bank and Habib Bank lost 143 points, Topline added.

Arif Habib Limited (AHL), in its review, said it was a “weak start to the week, however, the KSE-100 maintained the 75,000 level.”

Systems Limited (+2.3%), Meezan Bank (+0.77%) and TRG Pakistan (+2.9%) were the largest contributors to the index gains while MCB Bank (-2.03%), Engro Corp (-1.93%) and Oil and Gas Development Company (-1.41%) were the biggest drags, it said.

For the remainder of the week, maintaining the 74,000 level would keep the outlook positive and the 76,000 mark in sight, AHL added.

JS Global analyst Mohammed Waqar Iqbal said the market opened on a positive note. However, investors preferred to book profits and reduce their positions due to news flow regarding IMF conditions, especially in relation to taxes and currency devaluation.

“Going forward, the market is anticipated to maintain an upward momentum,” the analyst added.

Overall trading volumes decreased to 375.4 million shares against Friday’s tally of 496.7 million. The value of shares traded during the day was Rs16.3 billion.

Shares of 380 companies were traded. Of these, 137 stocks closed higher, 223 dropped and 20 remained unchanged.

Hum Network was the volume leader with trading in 30.9 million shares, gaining Rs0.93 to close at Rs10.90. It was followed by K-Electric with 18.3 million shares, gaining Rs0.1 to close at Rs4.67 and Dewan Motors with 17.9 million shares, gaining Rs2.68 to close at Rs39.73.

Foreign investors were net buyers of shares worth Rs76.4 million, according to the NCCPL.

Published in The Express Tribune, May 21^st, 2024.

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