PSX tumbles by 634 points on investor caution

The Pakistan Stock Exchange (PSX) experienced a sharp decline on Wednesday, with the KSE-100 index plummeting by 634.94 points amid growing political uncertainty and cautious investor activity ahead of the State Bank of Pakistan's (SBP) upcoming policy announcement.

The trading day started on a positive note, with the KSE-100 index hitting an intraday high of 79,507.17 points. However, market optimism quickly faded as bearish forces gained momentum. Political instability, weak global equities, and investor concerns over legislation related to the privatisation of state-owned enterprises (SOEs) and the terms of a new International Monetary Fund (IMF) programme, particularly restrictions on new Special Economic Zones (SEZs), weighed heavily on sentiment.

Profit-taking in key sectors such as exploration and production (E&P), banking, and fertilisers added to the market's woes. As a result, the index dipped below the 79,000 mark, reaching a low of 78,612.16 points before closing at 78,651.79.

"Stocks closed sharply lower on political uncertainty and cautious activity ahead of the SBP policy announcement," said Ahsan Mehanti, Managing Director of Arif Habib Corp. "Weak global equities, uncertainty over privatisation legislation, and concerns about IMF programme terms, especially restrictions on SEZs, played a catalytic role in the bearish close."

At the end of the session, the KSE-100 posted a loss of 634.94 points, or 0.8%, settling at 78,651.79.

According to Topline Securities, the market swung in both directions as bullish and bearish forces battled for control. However, "bears emerged victorious," the firm said, noting that investors opted for profit-taking in selective E&P, banking, and fertiliser stocks. Collectively, Mari Petroleum, Bank AL Habib, MCB Bank, Meezan Bank, and Engro Fertilisers dragged the index down by 315 points.

Conversely, Oil and Gas Development Company Ltd, Dawood Hercules Corp, and Pak Elektron provided some relief, adding a total of 54 points. Arif Habib Limited (AHL) highlighted the concern over the market's inability to maintain the 79,000 level, raising questions about the near-term outlook for the KSE-100. "37 stocks rose and 59 fell with Oil and Gas Development (+0.73%), Dawood Hercules Corp (+1.12%) and Pak Elektron (+4.56%) were the biggest upside index contributors while Mari Petroleum (-2.26%), Bank Alfalah (-2.65%) and MCB Bank (-2.11%) has the biggest index drags."

"Focus is now on the SBP monetary policy, where consensus expects a 150-basis-point cut in interest rates at the September 12 meeting," AHL stated. JS Global analyst Mubashir Anis Naviwala attributed Wednesday's market decline to the lack of positive triggers and advised investors to view market pullbacks as investment opportunities, particularly in the banking and fertiliser sectors.

Overall trading volumes increased slightly to 532.7 million shares, compared to 509.5 million shares on Tuesday. The total value of shares traded was Rs14.7 billion. Of the 439 companies traded, 178 stocks advanced, 206 declined, and 55 remained unchanged.

WorldCall Telecom led in volume, with 80.9 million shares traded, though it lost Rs0.02 to close at Rs1.50. Pak Elektron followed with 42.6 million shares traded, gaining Rs1.17 to close at Rs26.85. Waves Home Appliances saw 34.02 million shares change hands, gaining Rs0.93 to close at Rs9.42.

During the session, foreign investors sold shares worth Rs629.5 million, according to the NCCPL.