Economic uncertainty weighs on stocks

KARACHI:

Pakistan Stock Exchange (PSX) dropped over 200 points owing to profit-taking in selected shares on Monday amid economic uncertainty and worries over the outcome of regulatory oversight of stock trading.

In the morning, the KSE-100 index opened on a positive note, reaching its intra-day high of 79,014.68 points. However, the early gains proved short-lived as the market quickly reversed course due to political noise and concerns whether the International Monetary Fund (IMF) would approve Punjab's power tariff reduction.

Those factors, coupled with a Rs2.8 trillion funding plan aimed at preventing industrial closures at a time of funding constraints, fueled bearish sentiment.

Investors engaged in profit-taking in key sectors including banking, fertiliser, auto and steel. As a result, the market dropped below the 79,000 mark and reached its intra-day low of 78,240.36 points.

Although mid-session support emerged following release of August 2024 Consumer Price Index (CPI)-based inflation data, which showed a slowdown in inflation to 9.6% year-on-year (YoY), it was not enough to offset the losses. The index ended trading near the day's low with notable losses.

"Stocks closed lower on economic uncertainty and concerns over the outcome of ongoing regulatory oversight of share trading in public interest," said Ahsan Mehanti, MD of Arif Habib Corp, adding that mid-session support came on the back of upbeat CPI inflation data for August, which stood at 9.6% YoY.

"Political noise and uncertainty over IMF's approval of power tariff cut and a Rs2.8 trillion funding plan to avert industrial closures played the role of catalysts in bearish close at the PSX."

At the end of trading, the benchmark KSE-100 index registered a decrease of 204.92 points, or 0.26%, and settled at 78,283.30.

Topline Securities, in its commentary, noted that Pakistan equities moved in both directions as bullish and bearish forces confronted each other throughout the session to take the helm at the PSX.

"Investors chose to resort to profit-taking in selective stocks of banking, fertiliser, auto and steel sectors. Resultantly, Meezan Bank, Habib Bank, Engro Corporation, Millat Tractors and International Industries lost 410 points cumulatively," it said.

On the flip side, Hub Power, Mari Petroleum and Bank AL Habib collectively added 326 points as they witnessed rejuvenated buying interest in them, Topline added.

Arif Habib Limited (AHL), in its report, observed that there was "another session when the KSE-100 stood below 79,000."

On the KSE-100 index, 30 stocks rose and 65 fell with Hub Power (+1.22%), Mari Petroleum (+1.53%) and Thal Limited (+5.88%) providing the biggest upside contribution," it said, adding that Meezan Bank (-1.89%), Habib Bank (-1.75%) and Millat Tractors (-1.91%) were the largest drags.

JS Global analyst Mohammed Waqar Iqbal said that bullish momentum failed to last longer as profit-taking at higher levels gradually eroded the gains.

"Investors are advised to be patient, focusing on buying opportunities during dips, particularly in fertiliser, cement, oil and gas, and technology sectors," the analyst added.

Overall trading volumes decreased to 457.3 million shares compared with Friday's tally of 680.8 million. The value of shares traded during the day was Rs15.9 billion.

Shares of 447 companies were traded. Of these, 107 stocks closed higher, 287 dropped and 53 remained unchanged.

Hascol Petroleum was the volume leader with trading in 46.4 million shares, losing Rs0.25 to close at Rs7.65. It was followed by Agha Steel with 28.8 million shares, losing Rs1.52 to close at Rs13.68 and Secure Logistics with 21.5 million shares, losing Rs1.48 to close at Rs14.89.

Foreign investors were net buyers of shares worth Rs298.05 million, according to the NCCPL.