PSX retreats over market status downgrade

KARACHI:

Pakistan Stock Exchange on Friday concluded the week with thin losses over concerns that global indices provider FTSE Russel would downgrade Pakistan to the frontier market status and due to consolidation of the market around 80,000 levels.

Projections of an increase in inflation due to the government’s tough tax measures in the budget for FY25 prevented investors from building fresh positions, resulting in the KSE-100 index hitting its intra-day low of 80,080.25 points well before midday.

However, strong sectors such as automobile assemblers, commercial banks and refineries mostly traded in the green, which propelled the index to the intra-day high of 80,627.49 later in the day.

The market again took a dive close to the day’s low with investors weighing the impact of an 8% decline in oil sales during FY24 and a 12.6% drop in cement dispatches in June 2024.

Before close, the bourse made a notable recovery and ended the day with a slight loss of 70 points.

“Stocks closed lower amid concerns over the potential downgrade of Pakistan’s status to the frontier market by FTSE Russell,” said Ahsan Mehanti, MD of Arif Habib Corporation.

“The bearish close was fuelled by several factors including the weak rupee and projections of higher inflation due to stringent tax measures in budget,” he said, adding there were also concerns over an 8% decline in oil sales during FY24 and a 12.6% drop in cement dispatches in June.

At the end of trading, the benchmark KSE-100 index recorded a slight fall of 70.01 points, or 0.09%, and settled at 80,212.79.

Topline Securities, in its report, said that a volatile session was observed at the bourse as the index traded between its intra-day high of +345 points and intra-day low of -70 points. It settled at 80,213, down 0.09%.

The volatility could be attributed to consolidation around the psychological level of 80,000 after a recent rally in the market, it said.

Investor interest was observed in mid-cap banks with major positive contribution coming from Habib bank, Bank AL Habib, National Bank, Habib Metropolitan Bank and Askari Bank. They contributed 333 points to the index.

On the flip side, Oil and Gas Development Company, Hub Power, MCB Bank, Meezan Bank and Bank Alfalah pulled the index down by 172 points, added Topline.

Arif Habib Limited (AHL), in its report, commented the “index witnessed a strong expansion in the week with the KSE-100 gaining 2.34% to close above 80k.”

On Friday, Habib Bank (+4.74%), Bank AL Habib (+2.29%) and National Bank (+8.97%) were the biggest upside contributors, it said, adding that Oil and Gas Development Co (-1.72%), Hub Power (-0.88%) and MCB Bank (-0.89%) were the major drags.

“The end-of-week decline has stabilised the bourse above the 80,000 mark, which is a positive price action. The coming week is expected to see further upside,” said AHL.

JS Global analyst Mubashir Anis Naviwala wrote in his report that lacklustre activities continued at the PSX as investors preferred to book profits at higher levels.

“Moving forward, we expect profit-taking to continue, however, corporate result announcements and developments related to the next IMF programme could trigger market sentiment,” the analyst added.

Overall trading volumes decreased to 448.98 million shares compared with Thursday’s tally of 496.8 million. The value of shares traded during the day stood at Rs18.99 billion.

Shares of 432 companies were traded. Of these, 152 stocks closed higher, 229 fell and 51 remained unchanged.

The Bank of Punjab was the volume leader with trading in 34.4 million shares, gaining Rs0.17 to close at Rs5.70. It was followed by National Bank with 28.5 million shares, gaining Rs3.86 to close at Rs46.91 and PIA Holding Co with 25.1 million shares, gaining Rs1.44 to close at Rs19.90.

Foreign investors were buyers of shares worth Rs999.01 million, according to the NCCPL.