PSX falls amid futures rollover, rate cut concerns

Stocks at Pakistan's bourse closed lower on Wednesday, driven by selling pressure due to rollover of futures' contracts and concerns over a cautious policy rate cut by the State Bank of Pakistan (SBP).

Analysts cited rupee instability, political uncertainty and doubts over ability to meet the International Monetary Fund (IMF) tax collection targets, as factors behind bearish activity. As a result, the KSE-100 index largely traded in the negative zone and registered a decline of 543 points. Fauji Fertiliser Company's lower-than-expected 4Q2024 results were a major contributor to the sluggish activity, with key sectors such as fertiliser and energy contributing significantly to the market's downward movement.

Analysts observed that the index needed to regain its momentum within the 112-115k range to alleviate the risk of further downtrend. Ahsan Mehanti of Arif Habib Corp commented that stocks closed lower amid selling pressure in futures contract rollover and worries over the cautious SBP policy rate cut.

He added that rupee instability, political noise and uncertainty about the outcome of slippages in the IMF's tax collection targets played the role of catalysts in bearish activity. At the end of trading, the benchmark KSE-100 index recorded a decline of 543 points, or 0.48%, and settled at 111,487.36.

In its report, Topline Securities stated that the KSE-100 index largely traded in the negative zone and closed at 111,487. This pressure in the market could be attributed to the lack of triggers, selling by institutions and the ongoing futures rollover week, it said.

Fauji Fertiliser Company declared 4Q2024 results, where it posted earnings per share (EPS) of Rs9.94, down 42% quarter-on-quarter and up 90% year-on-year, taking CY24 EPS to Rs45.49, up 118% year-on-year. The result announcement was accompanied by a final cash dividend of Rs21 per share, taking total payout for CY24 to Rs34.86. Earnings were lower than expectation due to an impairment loss of Rs4 billion and higher distribution costs, the brokerage house added.

Top negative contributors to the index were Fauji Fertiliser Company, Engro Fertilisers, Pakistan State Oil, MCB Bank, Hub Power and Bank Alfalah, which cumulatively weighed down the index by 508 points, Topline said.

In its review, Arif Habib Limited (AHL) noted that the KSE-100 index saw more weakness as it ventured outside of the 112,000-115,500 range and would need to regain the range to alleviate the risk of further downward trend. Getting back into the range would suggest a "seek and destroy" market profile to frustrate both sides of the fence, it said.

During the day, 28 shares rose while 67 fell with Mari Petroleum (+5.14%), National Bank of Pakistan (+1.84%) and Indus Motor (+1.97%) contributing the most to index gains. On the other hand, Fauji Fertiliser Company (-2.38%), Engro Fertilisers (-1.31%) and Pakistan State Oil (-2.18%) were the biggest drags, AHL said. It added that 112,000 points was the level that should be watched for in the remaining week.

Ali Najib of Insight Securities commented that investors chose to trim their positions due to their "sell-on-strength" view. The day's highlight was Fauji Fertiliser Company's result, which was below expectations mainly due to lower-than-expected margins and a one-off impairment loss, he said.

Stocks of fertiliser, oil marketing companies, banking and power sectors witnessed major selling, Najib added.

Overall trading volumes decreased to 449.2 million shares compared with Tuesday's tally of 517.8 million. Shares of 448 companies were traded. Of these, 138 stocks closed higher, 247 fell and 63 remained unchanged.

Cnergyico PK was the volume leader with trading in 31.2 million shares, gaining Rs0.17 to close at Rs7.53. It was followed by K-Electric with 29.7 million shares, gaining Rs0.09 to close at Rs4.58 and Citi Pharma with 25.4 million shares, falling Rs0.4 to close at Rs93.26.