PSX posts modest fall on investor caution

KSE-100 index loses 108.91 points, settles at 73,754.02

KARACHI:

Pakistan Stock Exchange (PSX) on Friday concluded trading with a modest loss of over 100 points as investors were cautious ahead of the State Bank of Pakistan’s (SBP) monetary policy announcement on June 10.

Concerns over surging power tariffs impacting industrial earnings, and Moody’s projection of the withdrawal of foreign exchange reserves for foreign debt repayment frustrated investors.

At the beginning of trading, panic gripped the bourse amid rumours of higher taxes in the upcoming budget presentation, which pulled the KSE-100 index to the intra-day low of 71,781.96 points.

However, large sectors such as fertiliser, automobile and services extended support, which helped the market recover and touch the intra-day high of 73,902.79 points.

“Stocks closed lower on concerns over surging power tariffs impacting industrial earnings and Moody’s projection of withdrawal of foreign exchange reserves for foreign debt repayment, leading to near-term default risks,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Cautious activity ahead of the SBP policy announcement and uncertainty over tax measures for the capital market in the federal budget to seek $8 billion IMF loan played the role of catalysts in bearish close at the market.”

At the end of trading, the benchmark KSE-100 index posted a loss of 108.91 points, or 0.15%, and settled at 73,754.02.

Topline Securities, in its commentary, wrote “a volatile session was observed at the exchange, as the index declined to the intra-day low of 2,081 points largely due to rumours suggesting that in the budget for FY25, there might be an increase in capital gains and dividend tax rates to match the standard personal or corporate income tax rates.”

Speculations also hinted at a potential rise in the maximum personal income tax to 45%, it said.

However, as the day progressed, sanity prevailed as investor sentiment shifted and they began accumulating shares, anticipating a potential cut in the policy rate by 100-200 basis points in the monetary policy meeting scheduled for Monday.

Moreover, the talk of increase in tax on the capital market remained just a rumour, considering the market had already experienced a decline of 2.8% on a week-on-week (WoW) basis.

Major negative contribution of 302 points came from Meezan Bank, Pakistan Petroleum Limited, Habib Bank, MCB Bank, Oil and Gas Development Company and United Bank, Topline added.

Arif Habib Limited (AHL), in its commentary said the “KSE-100 index dropped 2.8% WoW with losses extending to 71,781 before a sharp Friday recovery to close at 73.7k.”

Meezan Bank (-3.73%), Pakistan Petroleum (-2.14%) and Habib Bank (-1.81%) were the biggest downside contributors, it said. Major support to the index came from Fauji Fertiliser Company (+2.24%), Millat Tractors (+2.55%) and Systems Limited (+1.22%).

“With budget and monetary policy meeting triggering the volatility, it is better to remain cautious for now,” AHL suggested.

Overall trading volumes increased to 559.5 million shares against Thursday’s tally of 352.7 million. The value of shares traded during the day was Rs20.2 billion.

Shares of 441 companies were traded. Of these, 180 stocks closed higher, 200 dropped and 61 remained unchanged.

Pervez Ahmed Company was the volume leader with trading in 78.9 million shares, gaining Rs0.8 to close at Rs1.50. It was followed by Fauji Cement with 34.4 million shares, gaining Rs0.85 to close at Rs22.79 and WorldCall Telecom with 28.3 million shares, gaining Rs0.01 to close at Rs1.32.

Foreign investors were net sellers of shares worth Rs94.1 million, according to the NCCPL.

Published in The Express Tribune, June 8^th, 2024.

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