PSX ends month with over 1,300-point slump

Pakistan Stock Exchange (PSX), after rallying for several days and earning the title of best-performing market by crossing the 90,000 barrier, now appears to be on a slippery ground as the KSE-100 index ended October with a plunge of over 1,300 points, slipping just below 89,000.

The decline was triggered by institutional profit-taking and the uncertainty surrounding the State Bank of Pakistan's (SBP) upcoming policy rate decision. Experts also attributed the drop to rupee volatility and investor caution ahead of the IMF's review of its Extended Fund Facility (EFF).

Despite Thursday's pullback, the KSE-100 posted a 9.68% gain for October, becoming the second best performing index globally, behind Kenya.

"Stocks closed sharply lower near the end of earnings season on institutional profit-taking," said Ahsan Mehanti, Managing Director of Arif Habib Corp. Rupee instability and uncertainty about the SBP's decision on policy rate ahead of the IMF's first review of EFF played the role of catalysts in bearish close at the PSX, he added.

At the close of trading, the benchmark KSE-100 index recorded a slump of 1,319.80 points, or 1.46%, and settled at 88,966.77.

Topline Securities, in its market review, wrote that the KSE-100 index's recent rally was on account of expectations of a reduction in policy rate. However, profit-taking was observed on Thursday on the back of a decline in T-bills' auction.

During the day, value-wise top traded companies were Sazgar Engineering (Rs2.15 billion), Pakistan State Oil (Rs1.83 billion), Attock Refinery (Rs1.57 billion), Pakistan Petroleum (Rs1.22 billion) and TRG Pakistan (Rs995 million), it said.

Point-wise, major contribution to the market's fall came from banks and fertiliser companies, including MCB Bank, Habib Bank, Meezan Bank, Engro Corp and Engro Fertilisers, which pulled the index down by 551 points, it added. According to Topline's monthly review, the KSE-100 gained 9.68% month-on-month, which could be attributed to institutional buying, good corporate earnings and expectations of a reduction in policy rate.

Arif Habib Limited, in its report, said that a strong downward push from resistance saw the KSE-100 lose 1.23% and close the month below the 90,000 mark. "The KSE-100 gained 9.93% in October, making it the second best performing market globally, following Kenya," it said.

On the economic front, Pakistan recorded a budget surplus for the first time since the second quarter of fiscal year 2004, primarily driven by a remarkable profit of Rs2.5 trillion from the SBP. It resulted in a historic primary surplus of Rs3 trillion, the largest-ever recorded, AHL added.

JS Global analyst Mohammed Waqar Iqbal said that after significant intra-day fluctuations, the bourse closed the session in negative territory with a loss of over 1,300 points. "Profit-taking was concentrated in key sectors, including cement, fertiliser and financial services," he said, adding that the upcoming inflation data and monetary policy announcement were expected to play a pivotal role in determining the market's direction.

"A buy-on-dips strategy is recommended, given these potential catalysts," the analyst said. Overall trading volumes decreased to 546.3 million shares compared with Wednesday's tally of 614.6 million. The value of shares traded during the day was Rs24.1 billion.

Shares of 437 companies were traded. Of these, 137 stocks closed higher, 240 fell and 60 remained unchanged.

K-Electric was the volume leader with trading in 73.6 million shares, gaining Rs0.18 to close at Rs4.44. It was followed by The Bank of Punjab with 42.7 million shares, gaining Rs0.29 to close at Rs5.82 and WorldCall Telecom with 25.9 million shares, losing Rs0.02 to close at Rs1.22. During the day, foreign investors sold shares worth Rs9.14 million.