Institutional profit-taking drags PSX from peak

KSE-100 index dives 589.95 points, settles at 81,657.97

KARACHI:

Pakistan Stock Exchange (PSX) ended its winning streak on Thursday and rapidly declined in a volatile session, driven by institutional profit-taking as uncertainty loomed over the government's tax reforms under the $7 billion International Monetary Fund (IMF) loan programme.

Earlier, trading began on a robust note, with the KSE-100 index reaching its intra-day high of 82,905.73 points. However, soon the market took a dive and then declined gradually until the close of trading. The bearish activity was triggered by a weak rupee, the declining global crude oil prices and concerns about the rising power sector circular debt. The market was unable to sustain the 82,000 mark, falling to the intra-day low of 81,552.66 points just before close.

With no major positive triggers, the bourse ended trading near the day's low with significant losses.

"Stocks closed lower on institutional profit-taking amid uncertainty over the outcome of government tax reforms to unlock the $7 billion IMF bailout and challenges caused by political and institutional tensions," said Ahsan Mehanti, Managing Director of Arif Habib Corp.

"Weak rupee, a slump in global crude oil prices and concerns over the surging power sector circular debt played the role of catalysts in bearish close at the PSX."

At the end of trading, the KSE-100 index recorded losses of 589.95 points, or 0.72%, and settled at 81,657.97.

Topline Securities, in its report, commented that in Thursday's battle between bulls and bears, the latter prevailed as the KSE-100 fluctuated sharply.

"On the news front, the IMF board approved a $7 billion Extended Fund Facility (EFF) for Pakistan, providing a critical boost to the nation's struggling economy," it said.

Key market movers were heavyweights such as Service Industries, Bank Alfalah, Pakistan Oilfields, Bank AL Habib and the National Bank of Pakistan, which collectively added 118 points to the index. On the contrary, Hub Power, Fauji Fertiliser, United Bank, Interloop Limited and Mari Petroleum together dragged the index down by 426 points, Topline added.

Arif Habib Limited (AHL) noted that a strong gap up to 82,700 was sold following the IMF's approval of the $7 billion loan programme. "This gap-up and sell-off are similar to the price behaviour seen following the last SBP rate cut," it said.

On the KSE-100 index, 35 shares rose while 62 fell with FTSE names Hub Power (-3.97%), Fauji Fertiliser (-2.57%) and United Bank (-1.35%) being the biggest drags, it said, adding that near-term support resided between 80.5k and 81.5k.

JS Global analyst Mubashir Anis Naviwala said that the stock market opened positively after news of the IMF board's approval of the $7 billion EFF. "However, price gains were quickly eroded due to foreign selling and profit-taking by local investors," he said. "Going forward, we advise investors to exercise caution at current levels and look for buying opportunities during market dips," the analyst added.

Overall trading volumes increased to 423.9 million shares compared with Wednesday's tally of 422.2 million. The value of shares traded during the day was Rs17.7 billion.

Shares of 444 companies were traded. Of these, 125 stocks closed higher, 263 declined and 56 remained unchanged.

PIA Holding Company was the volume leader with trading in 36.3 million shares, losing Rs1.15 to close at Rs20.91. It was followed by WorldCall Telecom with 33.1 million shares, losing Rs0.02 to close at Rs1.23 and Kohinoor Spinning with 25.8 million shares, losing Rs0.64 to close at Rs8.28.

During the day, foreign investors sold shares worth Rs992.9 million, according to the NCCPL.