PSX dips on monetary policy uncertainty

Early optimism about Pak-US trade deal evaporates; KSE-100 falls 1,415 points

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KARACHI:

The Pakistan Stock Exchange (PSX) closed bearish on Tuesday as investors resorted to profit-booking, pulling the benchmark KSE-100 index down by 1,415 points, or 1.02%.

In the morning, the session resumed on a strong note, with the index hitting intra-day high of 140,331, up 951 points, on optimism about reports that a trade and tariff deal between Pakistan and the US was nearing finalisation. However, early momentum faded as investors opted for profit-taking and switching sectors ahead of the upcoming monetary policy meeting, where a 50-basis-point rate cut is expected.

Ahsan Mehanti of Arif Habib Corp commented that stocks closed bearish over uncertainty ahead of the State Bank's policy announcement on Wednesday. Political noise, concerns over rupee movements and futures rollover pressure fuelled bearish activity at the PSX, he added.

At the end of trading, the KSE-100 index recorded a decrease of 1,415.24 points, or 1.02%, and settled at 137,964.82.

In its review, Topline Securities noted that bulls opened trading on a strong footing, lifting the benchmark index to an impressive intra-day high of 950 points. However, the optimism proved short-lived as heavy selling pressure took over, allowing bears to dominate proceedings.

The index slipped to intra-day low of 1,743 points before closing at 137,965, cementing a decisive bearish victory, it said.

Sentiment turned negative largely due to speculation surrounding Engro Fertilisers, with investors bracing for lower-than-expected earnings and dividend. The much-anticipated result, initially scheduled for Tuesday, was deferred to Wednesday morning, adding a layer of uncertainty and fuelling sell-off, Topline added.

In its commentary, Arif Habib Limited (AHL) stated that the PSX saw another day where the 140,000 mark proved too heavy to hold by the close of trading.

Some 23 shares rose while 76 fell on KSE-100, where Fauji Fertiliser Company (FFC, +0.75%), Ghana Glass Limited (+9.44%) and Meezan Bank (+0.83%) contributed the most to index gains. On the flip side, Engro Holdings (-3.17%), Engro Fertilisers (-5.12%) and UBL (-1.8%) were the biggest drags, it said.

AHL noted that FFC announced its first-half earnings per share (EPS) of Rs27.02, an increase of 5% year-on-year, with dividend of Rs19 per share. "This beat earnings and payout expectations."

Additionally, Pakistan National Shipping Corporation (+1.43%) received Letters of Intent from the Port Qasim Authority and Karachi Port Trust for jointly exploring investment opportunities to increase fleet and shipping business of the company, AHL mentioned.

JS Global analyst Muhammad Hasan Ather remarked that the benchmark index's decline was driven by profit-taking as investors adopted a cautious stance ahead of the State Bank's monetary policy announcement due on Wednesday.

Intra-day volatility reflected investor indecision amid speculation about a potential policy rate cut. With inflation falling and a stable exchange rate, market sentiment hinges on monetary policy committee decision. A dovish policy tone could trigger renewed buying and support upbeat outlook for equities in the near term, Ather said.

Overall trading volumes increased to 606.3 million shares compared with Monday's tally of 589.3 million. Traded value decreased to Rs32.7 billion as compared to Rs34.6 billion in the previous session. Shares of 484 companies were traded. Of these, 108 stocks closed higher, 350 dropped and 26 remained unchanged.

Telecard Limited was the volume leader with trading in 38.7 million shares, gaining Rs0.24 to close at Rs7.84. It was followed by The Bank of Punjab with 31.9 million shares, falling Rs0.02 to close at Rs13.47 and WorldCall Telecom with 28.5 million shares, shedding Rs0.02 to close at Rs1.44. Foreign investors bought shares worth Rs14.3 million, the National Clearing Company reported.