PSX slightly up after early rally loses steam

Pakistan Stock Exchange (PSX) ended the trading session on Tuesday with a thin increase as profit-taking and uncertainty about geopolitical developments wiped off most of the early gains, which were sparked by a strong rally over hopes of a ceasefire between the US and Iran.

The benchmark KSE-100 index surged 2,442 points to touch the intra-day high of 178,370.46 before retreating to the low of 176,062.70. It eventually settled at 176,133.57, up 205.83 points, or 0.12%, from the previous close.

The market had climbed 1,902.30 points, or 1.08% by 9:39am, driven by reports of mediation efforts and possible backchannel diplomacy between Washington and Tehran, which improved investor sentiment. The early optimism could not last longer as investors turned cautious in the absence of any concrete positive development on the geopolitical front, triggering profit-taking and limiting fresh long positions.

JS Global analyst Nawaz Ali said expectations of a ceasefire between the US and Iran lifted investor sentiment and kept the market largely in positive territory throughout the session. However, profit-taking emerged at elevated levels as investors remained cautious about building fresh long positions in the absence of concrete positive developments on the geopolitical front.

According to Ahmed Sheraz of KASB KTrade, the bourse witnessed another highly volatile trading session, with the benchmark index opening on a positive note and rallying more than 2,000 points intra-day before profit-taking erased most of the gains. He said investors were cautious and balanced optimism from selective buying against lingering geopolitical uncertainties and the corporate earnings season.

Oil prices stayed broadly stable, offering little fresh direction to the market, while investors continued to monitor developments in the Middle East and global markets, Sheraz said.

Market activity remained healthy, with total traded volumes reaching one billion shares and traded value hitting Rs35.7 billion. Lucky Cement, Engro Holdings, UBL, MCB Bank and Meezan Bank provided the biggest positive support to the benchmark index. On the other hand, OGDC, Cnergyico Pk, Maple Leaf Cement, Bank Alfalah and Attock Refinery weighed on the index amid some selling pressure. Looking ahead, Sheraz said market volatility was likely to persist as investors awaited corporate earnings announcements while keeping a close watch on geopolitical developments and global oil prices.

Arif Habib Limited (AHL) Deputy Head of Trading Ali Najib said market gains were capped by rumours of a deadlock between Pakistan and the International Monetary Fund (IMF) over the Rs1.7 trillion gas-sector circular debt along with speculation about delay in the refinery policy.

According to Najib, the limited financing appetite among local banks also weighed on sentiment. In terms of index contribution, Lucky Cement, Engro Holdings, UBL, MCB Bank and Meezan Bank collectively added 290 points. On the flip side, OGDC, Cnergyico Pk, Maple Leaf Cement, Bank Alfalah and Attock Refinery erased 164 points.

Any further signs of de-escalation between the US and Iran could support investor confidence, while delays in IMF-related reforms may keep sentiment cautious. Meanwhile, attractive stock valuations and the ongoing corporate earnings season may continue to provide selective buying opportunities, Najib added.

Overall trading volumes jumped to one billion shares compared with Monday's total of 675.9 million. The value of traded shares stood at Rs35.7 billion.

In the ready market, shares of 494 companies were traded. Of these, 268 stocks closed higher, 191 dropped and 35 remained unchanged. Cnergyico Pk was the volume leader with trading in 263.6 million shares, losing Rs0.65 to close at Rs9.96. Foreign investors bought shares worth Rs1.29 billion, the National Clearing Company reported.