Stocks slump over political noise, IPP dues

KARACHI:

Pakistan Stock Exchange (PSX) on Thursday succumbed to selling pressure after two highly bullish trading sessions as the benchmark KSE-100 index dived over 900 points amid a chaotic political situation and uncertainty about the settlement of Chinese independent power producers’ (IPPs) dues.

The bourse saw a promising start, continuing the positivity from previous sessions with the index reaching its intra-day high of 79,776.95 points. Despite remaining in the green earlier in the day, bulls could not maintain the momentum as selling pressure intensified gradually. Eventually, bears took over the market, dragging it deep into the red by the end of trading.

The downturn was driven by several factors, particularly the growing political tension and the uncertain fate of large outstanding dues of Chinese IPPs. The KSE-100 index touched its intra-day low of 78,330.58 points just before close and could not sustain the 79,000 mark.

“Stocks fell across the board on political uncertainty,” commented Ahsan Mehanti, MD of Arif Habib Corp. “Investor concerns over the settlement of Chinese IPPs’ dues, surging power tariffs, which would impact industrial earnings, political noise over placing a ban on the opposition and weak rupee played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index recorded a sharp decline of 927.68 points, or 1.17%, and settled at 78,469.33.

Topline Securities, in its report, declared it as “an astounded day”. Continuing the previous day’s trend, Pakistan equities commenced the day on a positive note as the KSE-100 registered a bullish momentum and hit the intra-day high, it said.

However, “a selling spree emerging out of the blue in the last hour dropped a bombshell on the bullish momentum.” The index could not withstand the headwinds and went into the negative territory by losing all gains made earlier in the day.

As part of results season, Fauji Fertiliser Bin Qasim reported earnings per share (EPS) of Rs4.84 for 2QCY24, a significant increase from Rs0.37 in 2QCY23 and Rs3.33 in 1QCY24. “Results were higher than industry expectations due to higher gross margins and other income but lower than our expectations,” Topline said.

Blue-chip stocks like Bank AL Habib, Hub Power, Systems Limited, MCB Bank and Meezan Bank contributed negatively to the index by losing 396 points cumulatively. On the flip side, Pakistan State Oil, Pakistan Oilfields and Attock Petroleum saw some buying interest as they added 40 points, Topline concluded.

Arif Habib Limited (AHL), in its report, stated that the PSX failed to regain the 80,000 level, triggering a move back towards recent lows. “With this, attention has now shifted to the weekly support at 77,500-78,000,” it added.

JS Global analyst Mubashir Anis Naviwala noted that trading activities began on a positive note but it could not be sustained for long as investors preferred to book profits at higher levels. “Moving forward, we advise investors to adopt a ‘buy-on-dips’ strategy primarily in cement, steel, tech and fertiliser sectors,” the analyst added.

Overall trading volumes decreased to 327.3 million shares compared with Wednesday’s tally of 386.98 million. The value of shares traded during the day was Rs15.3 billion.

Shares of 445 companies were traded. Of these, 135 stocks closed higher, 263 fell and 47 remained unchanged.

Fauji Fertiliser Bin Qasim Ltd was the volume leader with trading in 28.5 million shares, gaining Rs0.44 to close at Rs42.71. It was followed by Hascol Petroleum with 17.9 million shares, losing Rs0.24 to close at Rs6.45 and Dewan Motors with 16.5 million shares, gaining Rs0.27 to close at Rs44.57.

Foreign investors were net sellers of shares worth Rs16.6 million, according to the NCCPL.