PSX falls amid political uncertainty, weak rupee
Pakistan Stock Exchange (PSX) recorded a sharp decline on Tuesday, shedding 367 points as political uncertainty and a weakening rupee heavily impacted investor confidence, extending the market's downward trend.
Earlier, trading began on a robust note as the KSE-100 index reached its intra-day high of 82,010.09 points. However, the early optimism quickly evaporated as selling pressure intensified.
The market's decline was primarily driven by the government's decision to review and potentially terminate power purchase agreements (PPA) with the independent power producers (IPPs) due to capacity payment issues and the surging circular debt.
Additionally, concerns over potential action against banks for manipulation in the currency market further contributed to the bearish close.
Consequently, the market fell below the key 82,000 mark, reaching the intra-day low of 81,107.38 points. Despite some efforts for recovery, the index closed with notable losses.
"Stocks closed under pressure amid political noise and a weak rupee," said Ahsan Mehanti, Managing Director of Arif Habib Corp.
"Government's decision to review and terminate PPA with the IPPs over the capacity payment issue, surging circular debt and concerns over likely further action against banks for dollar manipulation played the role of catalysts in bearish close at the PSX."
At the end of trading, the KSE-100 index recorded a decrease of 366.86 points, or 0.45%, and settled at 81,483.64.
Topline Securities, in its report, commented the "market witnessed another bearish session as the KSE-100 index, despite opening on a positive note and gaining 159 points (0.19%), succumbed to the selling pressure."
"This downward shift was largely driven by profit-taking, particularly in key stocks such as Hub Power (-4.25%) and Engro Fertilisers (-1.99%), which reshaped market sentiment. A broad sell-off in Hub Power, Engro Fertilisers, MCB Bank, Pakistan Petroleum and Bank Alfalah collectively dragged the index down by 400 points," Topline added.
Arif Habib Limited (AHL) noted that selling in FTSE names kept the market under pressure throughout the session and prices dipped into the support zone where buyers emerged towards the close of trading.
Some 31 shares rose while 65 fell with Fauji Fertiliser (+4.04%), United Bank (+2.48%) and Fauji Fertiliser Bin Qasim (+5.58%) providing the biggest upside contribution, AHL said, adding that Hub Power (-4.24%), Engro Fertilisers (-1.99%) and MCB Bank (-2.07%) were the largest index drags.
"The outlook remains positive with IMF news expected to dominate headlines in the coming session," it noted.
JS Global analyst Mubashir Anis Naviwala said that profit-taking dominated trading at the PSX, pushing the market down by 367 points. "Looking ahead, we expect range-bound activity in the upcoming sessions," he said and advised investors to see any dips as a buying opportunity, particularly in banking and fertiliser sectors.
Overall trading volumes decreased to 369.6 million shares compared with Monday's tally of 400.3 million. The value of shares traded during the day came in at Rs17.1 billion.
Shares of 427 companies were traded. Of these, 127 stocks closed higher, 246 declined and 54 remained unchanged.
WorldCall Telecom was the volume leader with trading in 39.4 million shares, losing Rs0.03 to close at Rs1.25. It was followed by Pace (Pak) Ltd with 22.6 million shares, losing Rs0.16 to close at Rs5.23 and Hub Power with 21.2 million shares, losing Rs5.72 to close at Rs129.09.
During the day, foreign investors sold shares worth Rs308.99 million, according to the NCCPL.