PSX extends decline amid tough IMF conditions

KSE-100 index loses 365.83 points, settles at 81,292.13

KARACHI:

Pakistan's stock market extended its losing streak on Friday and registered a modest fall of over 350 points, driven by concerns over the International Monetary Fund's (IMF) stringent conditions to do away with energy subsidies and the monitoring of government spending.

The decline in the KSE-100 index reflected investor anxiety over the economic scenario as they feared that the IMF's requirements could have far-reaching implications for the fiscal policy and inflation targets.

In the morning, the market opened on a positive note but profit-taking soon pulled it down. Before midday, the index recovered and reached its intra-day high of 81,842.75 points later in the afternoon.

At that point, many investors offloaded their stockholdings, pulling the KSE-100 down to the intra-day low of 81,183.50 towards the close of trading.

Heavyweight banking and cement sectors faced notable selling pressure as investors reacted to the ongoing political noise and delay in the privatisation of state-owned enterprises (SOEs).

Those factors, coupled with the futures rollover, put the market under pressure and dampened investor interest.

"Stocks closed lower amid concerns over the IMF's tough conditions regarding end to energy subsidies, monitoring government spending, closure of SOEs and tax reforms," said Ahsan Mehanti, Managing Director of Arif Habib Corp.

"Ongoing political noise, delay in the privatisation of SOEs and pressure related to futures contract rollovers contributed to the bearish close at the PSX," he added.

At the end of trading, the KSE-100 index recorded a decline of 365.83 points, or 0.45%, and settled at 81,292.13.

Topline Securities, in its commentary, said that the KSE-100 index largely remained under pressure and dropped 0.45% at 81,292 points.

"This pressure can be attributed to selling by foreign corporates over the past couple of trading sessions, which is keeping investor sentiment in check," it said.

Major positive contributors to the index were Fauji Fertiliser Company, Hub Power, Engro Fertilisers, Fauji Fertiliser Bin Qasim and Lucky Cement, which cumulatively added 220 points.

On the other hand, Mari Petroleum, United Bank, MCB Bank, National Bank and Engro Corporation dragged the index down by 279 points, Topline added.

Arif Habib Limited (AHL) wrote in its report that the market reached the intra-week high of 82,995 points before closing down 0.9% week-on-week (WoW).

On Friday, 29 shares rose while 69 fell with the largest decline coming from Mari Petroleum (-2.55%), United Bank (-1.72%) and Engro Corporation (-1.66%), it said.

Citing major news reports, AHL said that Pakistan's first IMF review was expected in March or April next year. According to the Ministry of Finance, exports in September were projected to be between $2.5 billion and $3 billion, imports between $4.5 billion and $5 billion, and worker remittances between $2.7 billion and $3.2 billion.

JS Global analyst Mubashir Anis Naviwala said that profit-taking continued across the board throughout the day, with the KSE-100 closing at 81,292 points.

Moving forward, the analyst recommended investors to consider any downtrend as an opportunity to buy stocks in banking, automobile and fertiliser sectors.

Overall trading volumes decreased to 339.3 million shares compared with Thursday's tally of 423.9 million. The value of shares traded during the day was Rs12.9 billion.

Shares of 439 companies were traded. Of these, 129 stocks closed higher, 234 declined and 76 remained unchanged.

K-Electric was the volume leader with trading in 50.7 million shares, losing Rs0.17 to close at Rs3.67. It was followed by WorldCall Telecom with 32.4 million shares, losing Rs0.03 to close at Rs1.20 and Hub Power with 16.3 million shares, gaining Rs0.65 to close at Rs123.77.

During the day, foreign investors sold shares worth Rs546.9 million, according to the NCCPL.