Bears maintain grip at PSX over policy rate fears

KSE-100 index drops 356.51 points, settles at 73,862.93

KARACHI:

The ongoing economic uncertainty and the State Bank of Pakistan (SBP)’s upcoming monetary policy announcement caused anxiety at the Pakistan Stock Exchange (PSX) on Thursday, preventing market players from building positions and pushing the KSE-100 index below the 74,000 mark with a loss of over 350 points.

Earlier, the trading session began with a dip as investors kept a low profile in anticipation of harsh conditions under a new loan programme of the International Monetary Fund (IMF).

Following a brief recovery period, the index faced selling pressure again, driven by strong expectations that the government had planned to increase taxes on dividends, capital gains and interest income in the forthcoming budget. Looming uncertainty ahead of the SBP’s monetary policy statement continued to exert downward pressure on the index. Resultantly, the KSE-100 touched the intra-day low of 73,768.39 points and closed below the 74,000 mark.

“Stocks closed lower on concerns over economic uncertainty. Investor expectations for a cautious SBP policy and subdued growth impacted sentiment,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Reports of likely harsh conditions in the new IMF programme for raising power tariff and tax measures in the federal budget for FY25 played the role of catalysts in bearish close at the PSX.” At the end of trading, the benchmark KSE-100 index recorded a fall of 356.51 points, or 0.48%, and settled at 73,862.93.

Topline Securities, in its commentary, remarked that the “market trembled towards the day’s end”. Pakistan equities started the day on a positive note. However, the benchmark index could not sustain the 74,000 level due to a selling spree at the day’s peak, it said. As a result, the KSE-100 slipped into the negative territory.

“The selling pressure can be attributed to concerns that the government may raise taxes on dividends, capital gains and interest income in the upcoming budget,” Topline said.

Key contributors to the decline were Fauji Fertiliser Company, Oil and Gas Development Company (OGDC), Mari Petroleum, MCB Bank and Pakistan State Oil (PSO), which wiped off 136 points from the index. On the flip side, Bank Alfalah, Systems Limited, Lucky Cement, Engro Corporation and Millat Tractors added 65 points, Topline concluded.

Arif Habib Limited (AHL), in its report, wrote that the downtrend continued ahead of the budget “with 74,000 giving way”.

“Heading into the last session of the week, the KSE-100 is currently down 2.66% week-on-week with expectations of additional declines to come,” it said. “Pressure remains lower against the red resistance boxes.”

JS Global analyst Mubashir Anis Naviwala said the bourse remained under pressure throughout the day due to a lack of positive triggers and uncertainty about the upcoming monetary policy and federal budget measures. “Investor participation remained notably low,” he said. “Looking ahead, we advise investors to exercise caution at these levels and wait for opportunities,” the analyst added.

Overall trading volumes increased to 352.7 million shares against Wednesday’s tally of 348.5 million. The value of shares traded during the day was Rs12.3 billion.

Shares of 450 companies were traded. Of these, 134 stocks closed higher, 249 dropped and 67 remained unchanged.

WorldCall Telecom was the volume leader with trading in 17.6 million shares, losing Rs0.01 to close at Rs1.31. It was followed by Kohinoor Spinning with 14.9 million shares, gaining Rs0.18 to close at Rs4.43 and Dewan Motors with 13.7 million shares, losing Rs2.94 to close at Rs39.44.

Foreign investors were net sellers of shares worth Rs194.4 million, according to the NCCPL.

Published in The Express Tribune, June 7^th, 2024.

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