PSX dips 1,109 points over fuel price concerns

Index faces selling pressure as govt plans talks with refineries for diesel rate cut

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday gave up early gains as the benchmark KSE-100 index came under selling pressure late in the session over rising oil prices and uncertainty surrounding shipping traffic through the Strait of Hormuz.

The index opened on a positive note, when the KSE-100 gained 483 points, or 0.27%, and reached 178,438.68 by 9:34 am. The buying was led by sectors such as auto assemblers, cement, commercial banks, oil and gas exploration, oil marketing and power generation. However, the market failed to sustain the momentum and started falling gradually.

The index touched the intra-day high of 178,942.31 before dropping to the low of 176,638.11 and it ultimately settled at 176,846.36, down 1,109.15 points, or 0.62%. Investor sentiment remained subdued as oil prices climbed to their highest level in around three weeks. Persistent uncertainty about shipping through Hormuz, coupled with disruptions to global supplies, heightened concerns over energy costs and their potential impact on the broader economy. News saying that the PM had directed the petroleum minister to travel to Karachi and engage with oil refineries for relief in fuel prices further weighed on investor sentiment.

Arif Habib Limited (AHL) Deputy Head of Trading Ali Najib observed that the market opened on a positive note, briefly touching the intra-day high of 178,942 (+987 points, or 0.55%). However, sentiment weakened after media reports said the petroleum minister would negotiate with local refineries for a reduction in diesel prices amid elevated fuel costs and global market disruptions. The development triggered broad-based selling in the refinery sector, weighing on the broader market.

United Bank, Engro Holdings, Habib Bank, Fauji Fertiliser, Attock Refinery, Meezan Bank, Mari Energies, Systems Ltd, Cnergyico Pk and National Bank erased 859 points from the index. Going forward, Najib expected heightened volatility and selective profit-taking, with geopolitical developments and oil prices being key drivers of market direction.

KTrade Securities noted that the KSE-100 closed down by 1,109 points, extending the recent selling pressure. Market participation remained weak across major sectors, with commercial banks, investment companies, refineries, fertiliser and cement stocks coming under pressure. UBL, Engro Holdings, HBL, FFC, Attock Refinery, Meezan Bank, Mari Energies and Systems Ltd were among the notable laggards.

The energy sector failed to provide support seen in previous sessions. Despite higher oil prices and recent optimism about the refinery policy, the refinery sector lost momentum, removing an important pillar of market support, it wrote. Sentiment was likely to remain cautious as the index faced broad-based selling and struggled to reclaim the 180,000 level. Continued weakness in heavyweight banks, fertiliser, refineries and cement stocks could keep the market under pressure while stabilisation in energy names may provide temporary relief, KTrade predicted.

According to Topline Securities, the local bourse opened on a positive note, supported by news that the government planned to settle Rs1.49 trillion of the Rs3.6 trillion gas-sector circular debt. The settlement plan was expected to be partly funded through higher dividends from state-owned E&P firms and increased petroleum levy collection.

The initial optimism pushed the KSE-100 to the intra-day high of 986 points. However, the positive momentum quickly faded as aggressive selling pressure took over, with the index plunging to the intra-day low of 1,317 points. The market ultimately settled at 176,846, down 1,109 points as early gains were completely erased and bears took firm control of the session, Topline wrote.

Overall trading volumes decreased to 787.9 million shares versus Tuesday's total of 1.04 billion. The value of traded shares stood at Rs39.6 billion.

In the ready market, shares of 496 companies were traded. Of these, 185 stocks closed higher, 271 fell and 40 remained unchanged.

Cnergyico Pk was the volume leader with trading in 217.5 million shares, losing Rs0.78 to close at Rs14.01. Foreign investors sold shares worth Rs827.5 million, the National Clearing Company reported.