Stocks decline over pre-budget woes

KSE-100 index drops 465.55 points, settles at 75,517.49

KARACHI:

Pakistan Stock Exchange (PSX) began the new week on a highly bearish note as it dropped over 450 points owing primarily to pre-budget uncertainty among investors.

The KSE-100 index started off trading with a spike, surpassing the 76,000-point mark and reaching the intra-day high of 76,187.44. However, widespread profit-taking halted the surge and immediately dragged the market down.

The downturn was attributed to overleveraged investor positions, uncertainty about the outcome of negotiations on paying the outstanding dues of Chinese independent power producers (IPPs) and reports of a proposed Rs12.5 trillion tax collection target for FY25, which may impact industrial earnings.

Additionally, budgetary concerns and mixed signals from the International Monetary Fund (IMF) dampened market sentiment. As a result, the index fell below the 75,500 mark and reached the intra-day low of 75,485.62 points.

It closed near the day’s low where fertiliser, bank, and exploration and production (E&P) sectors mainly contributed to the decline.

“Stocks closed bearish on pre-budget uncertainty,” remarked Ahsan Mehanti, MD of Arif Habib Corp. “Overleveraging, uncertainty about the outcome of negotiations over IPPs’ dues and reports of a Rs12.5 trillion tax collection target for FY25, which will impact industrial earnings, played the role of catalysts in bearish close at the PSX.”

At the close of trading, the benchmark KSE-100 index registered a notable decrease of 465.55 points, or 0.61%, and settled at 75,517.49.

Topline Securities, in its report, said, “Pakistan equities kicked off the week with profit-taking around the 76,000 psychological level.”

“A relatively lacklustre momentum was witnessed during business hours in the backdrop of budgetary concerns and mixed vibes from the IMF,” it said. Resultantly, fertiliser, bank and E&P sectors contributed negatively where Fauji Fertiliser, MCB Bank, Pakistan Petroleum, Oil and Gas Development Company and Bank Alfalah lost 251 points.

On the contrary, Faysal Bank, Habib Bank and Systems Limited cumulatively added 93 points due to some buying interest in them, Topline added.

Arif Habib Limited (AHL), in its commentary, said it was an “interesting start to the week with Monday’s session taking a sizable chunk out of Friday’s gains.”

Some 23 shares rose and 72 fell with Faysal Bank (+7.99%), Habib Bank (+1.3%) and Systems Limited (+1.14%) being the biggest contributors to the index gains, it said, adding that Fauji Fertiliser (-2.28%), MCB Bank (-1.87%) and Pakistan Petroleum (-1.9%) were the largest drags.

“While maintaining a positive outlook on the market, we are cognisant of the downside potential, should important support levels give way,” AHL noted.

JS Global analyst Mohammed Waqar Iqbal said that the market opened on a positive note but later declined due to profit-taking from investors over tough demands from the IMF ahead of the budget. “Going forward, the market is anticipated to maintain its accumulation phase in the near term,” the analyst added.

Overall trading volumes decreased to 446.1 million shares against Friday’s tally of 609.8 million. The value of shares traded during the day was Rs16.4 billion.

Shares of 406 companies were traded. Of these, 123 stocks closed higher, 231 dropped and 52 remained unchanged.

K-Electric was the volume leader with trading in 55.6 million shares, losing Rs0.19 to close at Rs5.02. It was followed by Symmetry Group with 40.7 million shares, gaining Rs0.69 to close at Rs6.19 and WorldCall Telecom with 29.5 million shares, losing Rs0.05 to close at Rs1.37.

Foreign investors were net buyers of shares worth Rs603.9 million, according to the NCCPL.

Published in The Express Tribune, May 28^th, 2024.

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