S&P report drives PSX deep into red

KARACHI:

Pakistan Stock Exchange (PSX) dropped nearly 750 points on Wednesday in a highly bearish activity fuelled by investor concerns over the affirmation of “CCC+” rating for Pakistan by S&P Global, which underscored the country’s heavy reliance on foreign assistance for meeting debt obligations amid political instability.

In the morning, the trading session commenced positively, with the KSE-100 index reaching its intra-day high of 79,151.81 points well before midday. Afterwards, the momentum started losing strength gradually as a host of negative factors undermined investor interest.

The falling rupee, escalating political turmoil and widespread protests over the surging power tariffs contributed to the market’s downward trajectory.

As the day progressed, the index fell below the 79,000 mark and touched its intra-day low of 77,810.16 points. The trading session ended near the day’s low, booking substantial losses.

“Stocks closed sharply lower on investor concerns over S&P Global keeping Pakistan’s rating at ‘CCC+’, citing reliance on foreign assistance for debt obligations, and the impact of political risks on economy and structural reforms,” commented Ahsan Mehanti, MD of Arif Habib Corp.

“Falling rupee, political noise and protests over the surging industrial power tariffs also 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 741.82 points, or 0.94%, and settled at 77,886.99.

Topline Securities, in its report, remarked that a volatile session was observed at the PSX as the KSE-100 index traded between the intra-day high of 523 points and intra-day low of -819 points. It finally closed at 77,887, down 0.94%.

Major positive contribution came from Fauji Fertiliser, Fatima Fertiliser, Engro Corporation, Pakistan Tobacco and Nestle Pakistan, which contributed 90 points to the index.

On the other hand, United Bank, Systems Limited, Lucky Cement, Oil and Gas Development Company and Pakistan Oilfields pulled the index down by 321 points, Topline added.

Arif Habib Limited (AHL), in its report, stated that the stock market “followed through on Tuesday’s declines with additional downside to close below 78,000.”

Some 31 shares rose and 68 fell with Fauji Fertiliser (+0.96%), Fatima Fertiliser (+3.79%) and Engro Corp (+0.58%) being the biggest upside contributors while United Bank (-2.13%), Systems Limited (-2.96%) and Lucky Cement (-2.72%) were the largest drags, it said.

“The KSE-100 is in the 77,500-78,000 weekly support zone; if the market turns bullish, this is where buyers should emerge,” AHL added.

JS Global analyst Mubashir Anis Naviwala said that bearish activities continued at the bourse where investors preferred to stay on the selling side over rising tensions in the Middle East.

“Going forward, we advise investors to adopt a cautious stance where any dip can be considered an opportunity to buy mainly in cement, steel, tech and fertiliser sectors,” the analyst added.

Overall trading volumes increased to 382.6 million shares compared with Tuesday’s tally of 313.1 million. The value of shares traded during the day was Rs14.6 billion.

Shares of 442 companies were traded. Of these, 118 stocks closed higher, 254 fell and 70 remained unchanged.

WorldCall Telecom was the volume leader with trading in 81.2 million shares, gaining Rs0.09 to close at Rs1.25. It was followed by Kohinoor Spinning with 24.7 million shares, gaining Rs0.26 to close at Rs4.08 and TPL Properties with 19.7 million shares, gaining Rs0.46 to close at Rs7.94.

Foreign investors were net sellers of shares worth Rs220.4 million, according to the NCCPL.