PSX faces consolidation as index declines

Investors consolidated their positions at the Pakistan Stock Exchange (PSX) on Wednesday in a volatile trading session, influenced by caution ahead of State Bank's policy rate decision and the uncertain fate of talks between the government and the opposition.

The market recorded a decline of over 300 points, which was described as a correction that came after a three-day bull-run. Persistent offloading of shares by foreign investors also weighed down the index as they had been pulling out for the past few months.

The power sector was in the limelight following approval of revised agreements with the independent power producers (IPPs), sparking investor interest in Hubco shares.

"Pressure was witnessed at the PSX amid foreign fund outflows and uncertainly about the outcome of talks between the government and Pakistan Tehreek-e-Insaf (PTI)," said Ahsan Mehanti of Arif Habib Corp.

"Expectations of a cautious policy rate cut by the State Bank, rupee instability and uncertainty about the outcome of slippages in IMF's tax targets played the role of catalysts in bearish activity," he said.

At the end of trading, the benchmark KSE-100 index registered a loss of 308.46 points, or 0.27%, and settled at 114,495.71.

Topline Securities, in its review, said that the market experienced consolidation amid mixed cues. There was notable volatility, with the KSE-100 index reaching the intra-day high of 969 points and low of 505 points. It closed at 114,496, marking a decline of 308 points, which reflected cautious investor sentiment, Topline said.

In the power sector, Hubco drew significant investor interest following news of federal cabinet's approval of revised agreements with 14 IPPs. Meanwhile, Ghandhara Automobiles extended its positive momentum, driven by the successful launch of a new pickup truck.

Arif Habib Limited (AHL) reported that the KSE-100 saw correction following a three-day advance from 112k to 115k.

Some 40 shares rose while 58 fell with Hubco (+2.64%), Fauji Fertiliser Company (+1.03%) and Bank Alfalah (+2.66%) contributing the most to index gains. On the other hand, Mari Petroleum (-2.15%), Engro Holdings (-3.35%) and Service Industries (-7.2%) were the biggest drags. AHL pointed out that the power ministry was set to initiate the settlement of contracts with 14 more IPPs, adding that the government saved Rs1.4 trillion by revising agreements with power companies. "As a result, the prime minister is expected to announce a cut in tariffs."

Among corporate news, AHL said, Greentree offered to buy up to 35.15% of TRG Pakistan (+3.91%) to take control of the company via a tender offer.

Insight Securities Head of Sales Ali Najib commented that the PSX finally had a negative day post three consecutive green days. "The KSE-100 index turned south after a fierce battle between bulls and bears. This time around, bears had the upper hand as the index ended the day at 114,496, down 0.27%," he said.

JS Global analyst Mubashir Anis Naviwala remarked that the PSX experienced a volatile session, touching the intra-day high of 115,773 before profit-taking kicked in, which dragged the market down to the day's low at 114,298.

Overall trading volumes increased to 659.4 million shares against Tuesday's tally of 589.5 million. The value of shares traded during the day was Rs39.6 billion.

Shares of 455 companies were traded. Of these, 176 stocks closed higher, 225 fell and 54 remained unchanged.

WorldCall Telecom was the volume leader with trading in 68.7 million shares, up Rs0.02 to close at Rs1.80. It was followed by Pakistan Refinery with 56.9 million shares, gaining Rs1.99 to close at Rs43.49 and Cnergyico PK with 43.2 million shares, losing Rs0.15 to close at Rs7.06.

Foreign investors bought shares worth Rs81.5 million, according to the NCCPL.