Market watch : Pre-budget woes drag PSX deep into red

KSE-100 index loses 501.46 points, settles at 73,252.56

KARACHI:

Pakistan Stock Exchange (PSX) on Monday came under mounting selling pressure as it lost around 500 points amid pre-budget uncertainty and cautious trading ahead of the State Bank of Pakistan’s (SBP) monetary policy announcement later in the day.

Earlier, trading began on a positive note, with the KSE-100 index reaching its intra-day high at 73,915.45 points. However, the index could not sustain the momentum due to rapid selling, driven by investor concerns over potential increase in taxes on dividends, capital gains and interest income in the upcoming budget.

Additional factors contributing to the downturn included surging power tariffs, the International Monetary Fund (IMF)’s recommendations for tax measures and uncertainty about the rollover of billions of dollars in outstanding dues payable to Chinese independent power producers (IPPs).

Consequently, the market fell below the 73,000 mark, hitting the intra-day low of 72,981.34 points. Although the bourse managed to close above the 73,000 mark, it still posted significant losses.

“Stocks closed under pressure amid pre-budget uncertainty and cautious activity ahead of the SBP policy rate announcement,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Surging power tariffs, IMF’s conditions for tax measures in the federal budget for FY25 and uncertainty about the rollover of billions of dollars in payments to the Chinese IPPs played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index posted a loss of 501.46 points, or 0.68%, and settled at 73,252.56

Topline Securities, in its commentary, wrote “Monday’s selling pressure can be attributed to investor concerns over potential tax increases on dividends, capital gains and interest income in the upcoming budget as well as uncertainty surrounding the monetary policy announcement later in the day.”

A significant contribution to the market’s decline came from Hub Power, Fauji Fertiliser, Meezan Bank, Oil and Gas Development Company and Pakistan Petroleum, which collectively erased 254 points from the index.

In contrast, Service Industries, Pakistan State Oil, Systems Limited, National Foods and Millat Tractors added 65 points, Topline added.

Arif Habib Limited (AHL), in its commentary, said there were “further declines at the start of the week with all eyes on the MPC (monetary policy committee) meeting later in the day with the market anticipating a rate cut.”

Hub Power (-1.79%), Fauji Fertiliser (-1.8%) and Oil and Gas Development Company (-2.07%) were the biggest downside contributors, it said, adding that rate reduction would likely lead to upside moves. However, “the question would be how sustainable it will be ahead of the budget.”

JS Global analyst Mubashir Anis Naviwala said the bearish spell continued as the stock market lost more than 750 points in intra-day trading due to uncertainty over the budget and monetary policy.

“Looking ahead, we advise investors to exercise caution at these levels and wait for opportunities during market dips,” the analyst added.

Overall trading volumes decreased to 350.7 million shares against Friday’s tally of 559.6 million. The value of shares traded during the day was Rs10.2 billion.

Shares of 434 companies were traded. Of these, 133 stocks closed higher, 241 dropped and 60 remained unchanged.

Pervez Ahmed Company was the volume leader with trading in 57.4 million shares, gaining Rs0.13 to close at Rs1.63. It was followed by Amtex Limited with 33.7 million shares, losing Rs1 to close at Rs4.56 and WorldCall Telecom with 31.3 million shares, gaining Rs0.02 to close at Rs1.34.

Foreign investors were net sellers of shares worth Rs332.1 million, according to the NCCPL.