PSX plummets on heightened political noise

KARACHI:

Continuing the previous week’s trend, Pakistan Stock Exchange (PSX) on Monday fell sharply as it lost nearly 1,600 points over political uncertainty following the government’s move to potentially slap a ban on the major opposition party.

Earlier, the trading session began on a seemingly positive note, with the KSE-100 index reaching its intra-day high of 80,085.63 points. However, the optimism proved short-lived as the index started falling before midday.

The downward trajectory was largely attributed to panic selling during the corporate earnings season. The decline was exacerbated by the combination of political turmoil, outstanding dues of Chinese independent power producers (IPPs) and security concerns within the country.

Owing to the lack of positive triggers, the market fell to the intra-day low of 78,404.76 points immediately after midday. Despite some attempts for recovery, the market remained bearish and eventually closed near the day’s low with significant losses.

“Stocks closed sharply lower on political uncertainty after the government’s move to place a ban on the main opposition party,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Panic selling in the earnings season due to political noise, uncertainty about the settlement of Chinese IPPs’ dues and concerns over security situation in the country played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded a plunge of 1,578.70 points, or 1.97%, and settled at 78,539.19.

Topline Securities, in its report, said “continuing its last week’s trend, Pakistan equities resumed the week on a negative note.”

“Uncertain vibes from the political landscape, continuous institutional offloading and first-day selling in roll-over week can be blamed for Monday’s selling spree,” it said. Blue-chip stocks like Hub Power, Engro Corporation, Fauji Fertiliser, Oil and Gas Development Company and Pakistan Petroleum erased a total of 495 points from the index, Topline said, adding that on the flip side, Sui Northern Gas Pipelines, Habib Bank and Avanceon saw some buying interest as they added 44 points.

Arif Habib Limited (AHL), in its report, commented that the PSX saw a “weak open at the start of the week as politics continued to disrupt the upside momentum.”

Some 13 shares rose while 87 fell with Hub Power (-3.25%), Engro Corp (-3.34%) and Fauji Fertiliser (-2.48%) being the biggest index drags. Sui Northern Gas Pipelines (+4.07%), Habib Bank (+0.52%) and Avanceon (+1.19%) were the largest upside contributors, it said.

As per media reports, police in Islamabad arrested senior Pakistan Tehreek-e-Insaf (PTI) members which, in addition to a presser from the ISPR DG, spooked the market, AHL added.

JS Global analyst Mubashir Anis Naviwala noted that bears dominated the bourse as the KSE-100 lost 1,713 points in intra-day trade due to heightened political temperature in the country.

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

Overall trading volumes decreased to 375.6 million shares compared with Friday’s tally of 479 million. The value of shares traded during the day was Rs19.35 billion.

Shares of 446 companies were traded. Of these, 80 stocks closed higher, 319 fell and 47 remained unchanged.

K-Electric was the volume leader with trading in 33.4 million shares, losing Rs0.12 to close at Rs4.41. It was followed by Pak Elektron with 23.6 million shares, gaining Rs0.21 to close at Rs26.59 and PIA Holding Company with 19.2 million shares, losing Rs1.57 to close at Rs17.02.

Foreign investors were net buyers of shares worth Rs1.04 billion, according to the NCCPL.