PSX faces volatility amid geopolitical fears

Index rebounds after initial dip, still closes lower by 202 points

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KARACHI:

Pakistan Stock Exchange (PSX) on Tuesday saw volatile trading, with the index reaching the low of 113,677 points and the high of 116,843, before settling lower by over 200 points.

In the morning, trading got off to a weak start, but the market rebounded after midday. Analysts attributed the initial drop to a weak rupee, the government's efforts to clear the way for the International Monetary Fund's (IMF) $1 billion tranche and geopolitical tensions. By the close of trading, the market recovered substantially, mainly driven by the prime minister's statement indicating that the government was considering reducing electricity rates.

Ahsan Mehanti of Arif Habib Corp commented that mixed activity was witnessed at the PSX amid political noise and economic uncertainty. He added that the government's actions to qualify for the IMF's $1 billion tranche in March, alongside a weak rupee and geopolitical tensions, played the role of catalyst in bearish close at the PSX. At the end of trading, the benchmark KSE-100 index recorded a decline of 202.44 points, or 0.17%, and settled at 116,052.68.

In its review, Topline Securities commented that the market saw significant volatility, with the index reaching the high of 116,843 and low of 113,677.

Despite the initial drop, the market rebounded. A statement from the prime minister indicating that the government was considering reducing electricity rates played a role in the recovery of share prices, it said.

Topline noted that the decline was primarily driven by Engro Fertilisers, Fauji Fertiliser Company, HBL, Attock Refinery and Pakistan State Oil, which together contributed to a loss of 433 points. On the other hand, Engro Holdings, Oil and Gas Development Company (OGDC) and TRG Pakistan helped offset the losses, adding 436 points to the index.

Arif Habib Limited (AHL), in its report, said that the KSE-100 index saw a sharp decline to 113,000 points (-2.4% day-on-day), but it closed above the support of 115,500 points.

Some 36 shares rose while 59 fell with OGDC (+2.26%), TRG Pakistan (+7.31%) and Meezan Bank (+1.55%) contributing the most to index gains. On the other hand, Engro Fertilisers (-3.75%), HBL (-1.91%) and Attock Refinery (-6.82%) were the biggest drags, it said. AHL mentioned that Prime Minister Shehbaz Sharif had stated that the UAE had rolled over $2 billion worth of debt repayment, which was due in January.

JS Global analyst Muhammad Hasan Ather said that the market downturn came due to profit-taking, concerns about the rising circular debt in the gas sector and the IMF's levy on gas supply to the industrial captive power plants. However, the index showed signs of recovery later in the day, driven by positive investor sentiment and expectations of lower interest rates, he added.

Overall trading volumes decreased to 792.8 million shares compared with Monday's tally of 819.8 million. Shares of 453 companies were traded. Of these, 133 stocks closed higher, 275 fell and 45 remained unchanged.

WorldCall Telecom was the volume leader with trading in 80.6 million shares, gaining Rs0.06 to close at Rs1.71. It was followed by Cnergyico PK with 76.6 million shares, falling Rs0.06 to close at Rs7.35 and K-Electric with 45.7 million shares, gaining Rs0.05 to close at Rs5.03. During the day, foreign investors bought shares worth Rs15.7 million, the NCCPL reported.