Pakistan Stock Exchange (PSX) faced downward pressure on Tuesday, following a modest 100-basis-point (bps) policy rate reduction to 19.5% by the State Bank of Pakistan (SBP), aimed at further bringing down the inflation rate.
Earlier, the trading got off to a positive start, with the KSE-100 index peaking at 79,327.04 points. However, as the day progressed, the market began to decline, driven by concerns over a subdued economic growth projection for FY25, ranging between 2.5% and 3.5%, and significant outflows of $2.2 billion in FY24 due to profit and dividend repatriation.
Further contributing to the bearish sentiment was the weakening Pakistani rupee and uncertainty surrounding the re-profiling of China’s energy debt.
Consequently, the KSE-100 fell below the 79,000 level and hit its intra-day low of 78,518.23 points. Despite some efforts to recoup losses, the bourse closed near the day’s lowest point with modest losses.
“Stocks closed under pressure after the SBP decision about a meagre policy rate cut to ease inflationary pressure, projections of a subdued growth of 2.5-3.5% in FY25 and reports of a record $2.2 billion in profit and dividend outflows,” commented Ahsan Mehanti, MD of Arif Habib Corp.
“Weak rupee and uncertainty over the terms of China’s energy debt re-profiling also played the role of catalysts in bearish close at the PSX.”
At the end of trading, the benchmark KSE-100 index recorded a decrease of 198.94 points, or 0.25%, and settled at 78,628.81.
Topline Securities, in its report, remarked “the KSE-100 index swung in both directions.”
The State Bank cut its lending rate by 100 basis points to 19.5%, continuing the trend that started on June 10, it pointed out, adding that Fauji Fertiliser Company (FFC) announced its 2Q2024 results, where the company posted earnings per share (EPS) of Rs12.22 with a cash dividend of Rs10 per share, which was higher than industry expectations.
Arif Habib Limited (AHL), in its report, stated that early gains following a 100bps cut in policy rate failed to absorb the momentum above 79,000.
Some 30 shares rose while 68 fell with Fauji Fertiliser Company (+5.03%), Hub Power (+0.63%) and Pakistan Services (+4.94%) being the largest upside contributors to the index while Engro Fertilisers (-1.96%), Dawood Hercules (-2.94%) and Habib Bank (-1.82%) were the biggest drags, it said.
Overall trading volumes decreased to 313.1 million shares compared with Monday’s tally of 371.1 million. The value of shares traded during the day was Rs17.6 billion.
Shares of 447 companies were traded. Of these, 152 stocks closed higher, 239 fell and 56 remained unchanged.
The Organic Meat Company was the volume leader with trading in 24.8 million shares, gaining Rs1.45 to close at Rs40.47. It was followed by The Searle Company with 24.1 million shares, gaining Rs1.88 to close at Rs60.31 and Fauji Cement with 15.8 million shares, losing Rs0.89 to close at Rs21.63. Foreign investors were net sellers of shares worth Rs28.4 million, according to the NCCPL.
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