Profit-taking drives bourse down

KARACHI:

Pakistan Stock Exchange on Monday came under significant selling pressure, triggered by pre-budget uncertainty and the terms of a new International Monetary Fund (IMF) loan package such as tax reforms, tariff hikes and rupee devaluation.

In the morning, the KSE-100 index got off to a robust start, reaching its intra-day high of 76,209.96 points. However, the market quickly reversed course owing to the weakening Pakistani rupee and declining foreign currency reserves.

Additionally, concerns over the unpaid dues of Chinese independent power producers (IPPs) exacerbated the bearish sentiment.

Consequently, the index fell below the 76,000 mark, erasing all prior gains and touching its intra-day low of 75,495.38 points.

The downturn was also driven by poor performance in the IT, banking and fertiliser sectors. The market closed near the day’s low with notable losses.

“Stocks closed under pressure on pre-budget uncertainty and potential terms of a new IMF bailout package including tax reforms, tariff hikes and rupee depreciation,” said Ahsan Mehanti, MD of Arif Habib Corp. “Weak rupee, falling forex reserves and concerns over the unsettled Chinese IPPs’ dues played the role of catalysts in bearish close at the PSX.”

At the close of trading, the benchmark KSE-100 index posted losses of 303.22 points, or 0.4%, and settled at 75,575.26. Topline Securities, in its commentary, noted that Pakistan’s equity market experienced a decline.

“The negative trend was influenced by the IT, banking and fertiliser sectors with companies such as Systems Limited, Fauji Fertiliser Company, Engro Fertilisers, Meezan Bank and Engro Corp collectively shedding 219 points,” it said.

However, there was some positive contribution from TRG Pakistan, Millat Tractors and Pakistan Oilfields, which collectively added 96 points, Topline added.

Arif Habib Limited (AHL), in its report, wrote that there was a “weak start to the new trading week with key benchmarks continuing to churn sideways.”

Some 45 shares rose while 51 fell on the KSE-100 index with TRG Pakistan (+8%), Millat Tractors (+1.29%) and Pakistan Oilfields (+0.61%) being the largest contributors to the index gains, it said, adding that Systems Limited (-2.34%), Fauji Fertiliser (-1.45%), and Meezan Bank (-1.22%) were the major drags.

Tech names were well bid which included names like NetSol Technologies (+8%), Octopus Digital (+8%) and Air Link Communication (+5.36%), AHL noted.

JS Global analyst Mubashir Anis Naviwala said the stock market opened on a positive note, hitting a high of 76,210 before profit-taking drove it down to the low of 75,495. “Cement and technology stocks performed exceptionally well. However, the market ultimately closed down by 303 points at 75,575,” he said.

“Looking ahead, we recommend a buy-on-dips strategy, focusing on the cement, steel and technology sectors,” the analyst added.

Overall trading volumes decreased to 441.3 million shares against Friday’s tally of 523.3 million. The value of shares traded during the day was Rs18.6 billion.

Shares of 427 companies were traded. Of these, 200 stocks closed higher, 178 dropped and 49 remained unchanged.

Fauji Cement was the volume leader with trading in 32.8 million shares, gaining Rs0.21 to close at Rs23.66. It was followed by K-Electric with 31.65 million shares, gaining Rs0.05 to close at Rs5.01 and PIA Holding Company with 25.6 million shares, gaining Rs1.14 to close at Rs19.01.

Foreign investors were net buyers of shares worth Rs467.7 million, according to the NCCPL.

Published in The Express Tribune, June 4^th, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.