Profit-taking drives PSX down

KARACHI:

Pakistan Stock Exchange (PSX) opened the week on a bearish note, dropping over 200 points, as political uncertainty and foreign fund outflows weighed heavily on investor interest.

In the morning, trading commenced on a positive note, with the KSE-100 index reaching its intra-day high of 86,105.02 points. However, from that point onwards, the momentum shifted and the index began a gradual descent due to widespread profit-taking.

The downward trajectory was influenced by government action on tariff issues related to independent power producers (IPPs), concerns over the International Monetary Fund (IMF)-driven reforms impacting tax breaks in agricultural and textile sectors, and delay in privatisation of state-owned enterprises (SOEs).

As a result, the index fell below the key 86,000 mark, hitting the intra-day low of 85,156.11 points. With no positive catalysts to reduce pressure, the market ended the day near its lowest point with modest losses.

"Stocks closed under pressure on political noise and foreign outflows," said Ahsan Mehanti, Managing Director of Arif Habib Corp.

"Government action on IPP tariff payments, concerns over the outcome of IMF pressure for reforms in relation to tax breaks for agricultural and textile sectors, and delay in privatisation of SOEs played the role of catalysts in bearish close at the PSX."

At the close of trading, the KSE-100 index registered a decrease of 222.02 points, or 0.26%, and settled at 85,261.39.

Topline Securities, in its commentary, noted that the KSE-100 index opened on a positive note, reaching a high of 621 points. "However, the momentum proved short-lived as investors opted to book profits," it said.

The profit-taking was influenced by the expected downward revision in earnings for Hub Power, which dropped 9.15%, following early termination of its contract, as well as results of Engro Fertilisers, which fell 4.1%. The company declared 3QCY24 earnings per share of Rs13.47 and dividend of Rs2.50 per share, which was lower than industry expectations, Topline said.

Key contributors to the index's downturn were Hub Power, Engro Fertilisers, Oil and Gas Development Company, Bank AL Habib and Engro Corporation, which collectively erased 532 points.

Conversely, positive movements in Fauji Fertiliser, National Bank of Pakistan, Attock Refinery and International Steels contributed 326 points to the index, Topline added.

Arif Habib Limited (AHL), in its report, stated that the PSX experienced "consolidation" below 86,000 at the start of the week.

Some 54 shares rose while 44 fell with Fauji Fertiliser (+3.83%), National Bank of Pakistan (+3.96%) and Attock Refinery (+10%) being the biggest contributors to the index gains, it said, adding that Hub Power (-8.04%) remained the largest drag as it broke below Rs100 per share.

JS Global analyst Mohammed Waqar Iqbal observed that the stock market opened on a positive note but remained range bound throughout the session.

"Looking ahead, while market sentiment remains positive, slower activity cannot be ruled out due to potential political uncertainty and profit-taking by investors," he said, adding "it is recommended to book profits at current levels for short-term trades and wait for dips to consider further buying opportunities."

Overall trading volumes decreased to 477.6 million shares compared with Friday's tally of 560.7 million. The value of shares traded during the day was Rs23.5 billion.

Shares of 443 companies were traded. Of these, 205 stocks closed higher, 180 declined and 58 remained unchanged.

WorldCall Telecom was the volume leader with trading in 41.1 million shares, gaining Rs0.03 to close at Rs1.21. It was followed by Hub Power with 37.2 million shares, losing Rs8.59 to close at Rs98.31 and Pakistan Refinery with 30.2 million shares, gaining Rs0.96 to close at Rs25.30. During the day, foreign investors sold shares worth Rs1.02 billion, according to the NCCPL.