Stocks under pressure due to profit-taking

Index falls 1,332 points as political noise, gas sector concerns weigh

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KARACHI:

Pakistan Stock Exchange (PSX) on Monday endured significant turbulence, sparked by political uncertainty and institutional profit-taking amid the International Monetary Fund's (IMF) strict levies. The looming challenge of implementing critical economic reforms to secure a $1 billion IMF loan tranche in March further contributed to the bearish sentiment. The benchmark index recorded the intra-day high of 1,148 points before witnessing the intra-day low of 1,645 points. It eventually settled with a decline of 1.13% at 116,255 points.

Analysts pointed out the deteriorating financial health of state-owned energy companies and the ongoing challenges in Balochistan, which compounded market weakness.

Ahsan Mehanti of Arif Habib Corp commented that stocks closed under pressure amid political uncertainty. The IMF's strict levies on industrial captive power plants led to institutional profit-taking, he noted.

Mehanti added that subdued economic growth of 0.92% for July-September 2024 and concerns over the outcome of critical economic reforms to qualify for a $1 billion tranche in March played the role of catalysts in bearish activity at the PSX.

At the end of trading, the benchmark KSE-100 index recorded a decline of 1,331.86 points, or 1.13%, and settled at 116,255.13. In its market review, Topline Securities commented that the local bourse experienced a profit-booking day as investors opted to cash in on recent gains.

The KSE-100 index exhibited significant volatility, recording the intra-day high of 1,148 points and intra-day low of 1,645 points, closing at 116,255, a decline of 1,332 points, it said.

The brokerage house added that the bearish sentiment was largely influenced by concerns in the gas sector, following reports of a significant rise in circular debt. This development dampened investor confidence, leading to profit-taking across the board. It pointed out that the cement sector extended its downward trend as investors chose to book profits, spurred by reports of disagreements among industry players. While some were advocating for an increase in market share, others favoured adjustments in geographical sales to secure higher retention prices.

Arif Habib Limited (AHL), in its review, observed that the new trading week kicked off with a decline of 1.13%, with 27 shares rising and 70 falling. Oil and Gas Development Company (-3.84%), Pakistan State Oil (-5.12%) and Fauji Fertiliser Company (-1.29%) were the biggest index drags, it said.

AHL added that the World Bank planned to approve a $20 billion loan package for Pakistan under a new 10-year strategy to address key challenges in health care, education, and climate resilience. This marks a shift towards long-term development, aiming to shield projects from political instability.

Insight Securities Head of Sales Ali Najib said that law and order situation in Balochistan alongside finance minister's comments on state-owned energy companies highlighting that their financial systems were not up to the mark and a considerable increase in PSO's receivables weighed on market sentiment. Overall trading volumes decreased to 819.8 million shares compared with Friday's tally of 935.8 million.

Shares of 458 companies were traded. Of these, 113 stocks closed higher, 291 fell and 54 remained unchanged.

Cnergyico PK was the volume leader with trading in 83.2 million shares, falling Rs0.14 to close at Rs7.41. It was followed by Fauji Foods with 47.3 million shares, falling Rs0.91 to close at Rs18.41 and WorldCall Telecom with 41.3 million shares, losing Rs0.05 to close at Rs1.65.

During the day, foreign investors bought shares worth Rs159.9 million.