PSX faces post-budget pressure

In the post-budget trading session, the Pakistan Stock Exchange (PSX) faced a marginal decline, recording a drop of 291.51 points, amid market consolidation. The day began on an optimistic note, with the KSE-100 index reaching an intraday high of 78,541.21 points. However, this early momentum was short-lived as bearish trends soon dominated the market, reversing the initial gains.

Several factors contributed to this downturn, including foreign outflows, over-leveraging at PSX, uncertainties surrounding the International Monetary Fund’s (IMF) approval of new tax relaxation proposals in the federal budget for FY25, and pressures from futures rollover. Consequently, the market experienced a substantial dip, falling below the critical 78,000 level and reaching an intraday low of 77,908.98 points.

It is pertinent to note that some positive contributions were made by the fertiliser, food, cement, and exploration and production (E&P) sectors. As the overall market sentiment remained cautious due to economic uncertainties and market pressures, the index closed the day near its low with notable losses.

“Stocks closed lower amid consolidation in the post-budget session,” said Ahsan Mehanti, MD of Arif Habib Corp. “Foreign outflows, over-leveraging at PSX, uncertainty over IMF approval on new proposals for relaxing tax measures in the federal budget FY25, and pressure in futures rollover played a catalytic role in the bearish close.”

At the end of trading, the benchmark KSE-100 index recorded a substantial decline of 291.51 points, or 0.37%, and settled at 77,940.58. “The fertiliser, food, cement, and E&P sectors made positive contributions, with Engro Corp, Unity Foods, Fatima Fertiliser Company, Lucky Cement, and Pakistan Oilfields collectively adding 129 points. Conversely, MCB Bank, Oil and Gas Development Company, and Hub Power Company collectively lost 164 points,” said Topline Securities in its report.

Arif Habib Limited (AHL), in its commentary, wrote, “more declines as the KSE-100 moves down to test support.” “Thirty shares rose while 65 fell, with the largest positive contributions coming from Engro Corp (+2.1%), Unity Foods (+8.05%), and Fatima Fertiliser Company (+5.0%). MCB Bank (-2.28%), Oil and Gas Development Company (-1.97%), and Hub Power Company (-0.73%) were the biggest index drags,” it said, adding that the KSE-100 and KSE-30 are now approaching near-term support levels from where upside moves can be anticipated.

JS Global analyst Mohammed Waqar Iqbal noted that dull activities continued at PSX on Tuesday, evident by low volumes as investors preferred to be on the sidelines in the absence of triggers. “Going forward, as the corporate earnings season is about to begin, we expect some results-based rallies in the market. Therefore, investors are recommended to take positions in cement, banking, and tech stocks at lower levels,” the analyst added.

Overall trading volumes decreased to 292.2 million shares against Monday’s tally of 385.2 million. The value of shares traded during the day was Rs11.4 billion. Shares of 433 companies were traded. Of these, 144 stocks closed higher, 219 fell, and 70 remained unchanged.

Pervez Ahmed Company was the volume leader with trading in 26.81 million shares, gaining Rs0.18 to close at Rs2.29. It was followed by K-Electric with 17.9 million shares, losing Rs0.05 to close at Rs4.43, and WorldCall Telecom with 16.87 million shares, gaining Rs0.01 to close at Rs1.28. Foreign investors were net sellers of shares worth Rs169.63 million, according to the NCCPL.