PSX faces decline amid profit-taking

Index drops 1,510 points, fuelled by volatility, global oil price fall

KARACHI:

Pakistan Stock Exchange (PSX) on Tuesday faced significant volatility as the benchmark KSE-100 index dropped 1,510 points, or 1.33%.

Analysts attributed the bearish sentiment to profit-taking amid pressure from the approaching rollover of futures contracts and uncertainty surrounding the outcome of ongoing talks between the government and Pakistan Tehreek-e-Insaf (PTI).

The index initially surged by 1,112 points, reflecting early optimism, but later plunged by 1,629 points, driven by profit-taking and concerns over leverage positions and borrowing costs.

The cautious market behaviour was also influenced by the approaching end-of-year contract deadline, which added to the pressure on investors. Despite the decline, there was active trading with a volume of 881 million shares and a value of Rs54 billion. Ahsan Mehanti of Arif Habib Corp commented that profit-taking was witnessed at the PSX amid pressure from futures contracts rollover and uncertainty about the outcome of patch-up talks between the government and PTI.

He added that a weak rupee, falling global crude oil prices, and institutional selling in overbought shares played the role of catalysts in the bearish activity.

At the end of trading, the benchmark KSE-100 index recorded a decline of 1,509.61 points, or 1.33%, and settled at 112,414.81. In its review, Topline Securities commented that the KSE-100 index exhibited significant volatility as market sentiment remained uncertain.

The index climbed to the intra-day high of 1,112 points early in the session, reflecting some optimism, but later tumbled to the intra-day low of 1,629 points due to profit-taking, Topline said.

It added that the market's downturn was primarily driven by concerns over rising leverage positions, which heightened risk perceptions. This, combined with increasing borrowing costs, compelled investors to trim their portfolios.

Furthermore, the approaching last few days of December contract put additional pressure on market participants, resulting in a cautious and selective trading behaviour.

Fauji Fertiliser Company, Mari Petroleum, MCB Bank, Hub Power and Engro Corporation emerged as major laggards of the day, collectively dragging the index down by 850 points, Topline said. In its report, Arif Habib Limited (AHL) noted that the KSE-100 index backed off following a sharp two-day rally and closed down by 1.33%, ahead of the December 25 holiday.

Some 71 shares rose, while 27 fell, with UBL (+2.72%), Dawood Hercules Corporation (+3.3%) and Sui Northern Gas Pipelines Ltd (+6.35%) contributing the most to index gains. On the other hand, Fauji Fertiliser Company (-3.65%), Mari Petroleum (-3.37%) and MCB Bank (-3.84%) were the biggest drags, according to the AHL report.

JS Global analyst Muhammad Hasan Ather commented that the downturn was primarily driven by profit-taking following an early surge fuelled by political stability and favourable economic prospects. Despite the decline, the index's rise to the intra-day high of 115,036 demonstrated renewed investor confidence, he said.

Ather noted that the market's overall positive momentum was supported by improving macroeconomic indicators, including a significant current account surplus and increased foreign investment. These robust economic fundamentals continue to signal a promising outlook for the market, offering potential growth opportunities for investors, he said.

Overall trading volumes increased to 880.6 million shares compared to Monday's tally of 857.8 million.

Shares of 456 companies were traded. Of these, 129 stocks closed higher, 288 fell and 39 remained unchanged.

WorldCall Telecom was the volume leader with trading in 127.4 million shares, gaining Rs0.06 to close at Rs1.78. It was followed by Fauji Foods with 67.1 million shares, gaining Rs0.46 to close at Rs14.95 and Sui Southern Gas Company with 33.6 million shares, losing Rs0.39 to close at Rs46.09.

During the day, foreign investors sold shares worth Rs617.8 million, the National Clearing Company of Pakistan reported.