Profit-taking kicks in, pulling stocks down

KARACHI:

Pakistan Stock Exchange (PSX) came under bearish pressure on Wednesday as it lost over 800 points and closed below the 80,000 mark, dragged down by profit-taking at higher valuations.

Despite an initial surge which pushed the KSE-100 index close to the 81,000-point level, the market eventually succumbed to selling pressure. In the morning, trading began on a positive note, as the KSE-100 spiked to the intra-day high of 80,971.95, continuing the recent bullish trend. However, it could not maintain the bullish momentum and started declining because investors resorted to heavy profit-booking.

Prevailing uncertainty about the restructuring of $15 billion worth of Chinese energy debt ahead of a new International Monetary Fund (IMF) loan programme dented investor confidence.

Investors sought to secure profits, which resulted in the index plunging to the intra-day low of 79,841.32 points towards the close of trading. The index gradually declined for almost throughout the day and closed deep in the red. “Stocks closed sharply lower on concerns over economic uncertainty,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Uncertainty about the resolution of Chinese energy debt and the IMF’s condition to abolish Pakistan Sovereign Wealth Fund by September 30 for transparency and accountability of profit-making SOEs after the government’s tough 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 significant decrease of 830.51 points, or 1.03%, and settled at 79,841.56. Topline Securities, in its report, declared the day as “a profit-booking session” as investors chose to capitalise on the market’s strength.

The KSE-100 index reached its intra-day high very soon but later dipped to the intra-day low, reflecting a decline of 1.03%, it said. The negative momentum was led by prominent stocks such as Hub Power, Pakistan Petroleum, Dawood Hercules Corporation, Millat Tractors, Habib Bank and Bank AL Habib, which collectively contributed 362 points to the market’s downturn, Topline added.

Arif Habib Limited (AHL), in its report, commented that the market “is now testing support around 80,000; we are in the zone from where buyers are anticipated to show up”.

In a major news report, it said, the government would give a subsidy of Rs4-7 per kilowatt-hour (kWh) to residential consumers for three months till September. The relief will be provided to 20.5 million consumers who use up to 200 units per month and the government has informed the IMF that it will be financed through the development budget.

“Near-term, the market is looking for 80,000 to be regained to allow an additional upside expansion,” AHL added.

JS Global analyst Mubashir Anis Naviwala wrote that the market opened positively, but profit-taking brought the benchmark index down.

“Looking ahead, we recommend investors to consider a buy-on-dips strategy, particularly focusing on cement, automobile and technology sectors,” the JS analyst said.

Overall trading volumes decreased to 495.9 million shares compared with Tuesday’s tally of 610.3 million. The value of shares traded during the day stood at Rs22.1 billion.

Shares of 440 companies were traded. Of these, 153 stocks closed higher, 241 fell and 46 remained unchanged.

K-Electric was the volume leader with trading in 57.7 million shares, losing Rs0.02 to close at Rs4.89. It was followed by PIA Holding Company with 43.04 million shares, gaining Rs1.22 to close at Rs25.08 and Unity Foods with 28.6 million shares, gaining Rs2.41 to close at Rs34.87. Foreign investors were net buyers of shares worth Rs669.8 million, according to the NCCPL.