Stocks slump as budget uncertainty prevails

KSE-100 index nosedives 908.60 points, settles at 74,666.66

KARACHI:

Pakistan Stock Exchange (PSX), while continuing its downward trajectory, endured a slump on Tuesday as the KSE-100 index dropped over 900 points amid uncertainty ahead of the federal budget presentation.

Although the index had a promising start when it reached the intra-day high of 75,669.76 points, it was unable to maintain the momentum due to rapid selling. The downturn came due to several factors including the weak rupee, falling global crude oil prices and political instability.

Additionally, a 9% drop in petroleum sales in July-May FY24, increased power tariffs and a potential reduction in federal development spending aided the bearish trend.

Notably, tech, exploration and production (E&P), and power sectors were the primary contributors to the decline. As a result, the market fell below the 75,000 mark and reached the intra-day low of 74,592.74 points. It closed near the day’s low.

“Stocks slumped amid uncertainty ahead of the federal budget for FY25,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Rupee fall, weak global crude oil prices, political uncertainty, dismal data of petroleum sales for July-May FY24, which were down 9%, power tariff hikes and reports of reduction in the proposed development spending played the role of catalysts in bearish close at the PSX.”

At the close of trading, the benchmark KSE-100 index posted losses of 908.60 points, or 1.2%, and settled at 74,666.66.

Topline Securities, in its commentary, noted that the benchmark index could not withstand the 75,000 level due to a selling spree at the day’s high.

“The inexplicable bearish headwinds were astonishing in investors’ circles considering the upbeat Consumer Price Index number, where it landed at 11.80%, way below the street consensus of 13.7% (according to a Bloomberg survey),” it said.

Tech, E&P and power sectors contributed negatively to the index where Systems Limited, Mari Petroleum, Hub Power, Oil and Gas Development Company and Pakistan Petroleum lost 341 points.

On the flip side, Lucky Cement, Habib Metropolitan Bank and Highnoon Laboratories saw some buying interest as they cumulatively added 33 points, Topline added.

Arif Habib Limited (AHL), in its report, wrote “with the market hinting at a downside, key levels gave way on Tuesday to take the KSE-100 and KSE-30 below the key 75,000 and 24,000 levels.”

Some 18 shares rose while 79 fell with Systems Limited (-4.33%), Mari Petroleum (-3.03%) and Hub Power (-1.45%) being the biggest downside contributors, AHL said, adding that Lucky Cement (+0.82%), Habib Metropolitan Bank (+0.65%) and Highnoon Laboratories (+0.9%) provided the largest upside contribution.

JS Global analyst Mubashir Anis Naviwala said “profit-taking dominated trading at the PSX, leading to a loss of 909 points in the KSE-100 index due to uncertainty over the policy rate cut and the upcoming budget.”

“We recommend investors to seize any downside as an opportunity to invest in banking and fertiliser sectors,” the analyst added.

Overall trading volumes decreased to 414.5 million shares against Monday’s tally of 441.3 million. The value of shares traded during the day was Rs18.3 billion.

Shares of 452 companies were traded. Of these, 99 stocks closed higher, 280 dropped and 73 remained unchanged.

Fauji Cement was the volume leader with trading in 36.6 million shares, losing Rs1.15 to close at Rs22.51. It was followed by K-Electric with 35.2 million shares, losing Rs0.14 to close at Rs4.87 and WorldCall Telecom with 21.7 million shares, losing Rs0.01 to close at Rs1.34.

Foreign investors were net buyers of shares worth Rs885.98 million, according to the NCCPL.

Published in The Express Tribune, June 5^th, 2024.

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