PSX drops 1,693 points on geopolitical worries

Pakistan Stock Exchange (PSX) succumbed to significant selling pressure on Monday as the benchmark KSE-100 index dropped 1,692.74 points, or 0.97%, over rising crude oil prices and escalating tensions around the Strait of Hormuz, which weighed on investor sentiment.

The index opened the week on a fragile note, falling 429.59 points, or 0.25%, at 9:39 am. It initially hit the high of 175,353.67, before selling intensified and dragged the index to the intra-day low of 173,603.75. Major sectors that came under pressure were oil marketing companies (OMCs), auto assemblers, cement, commercial banks and refineries.

In the international market, oil prices rose more than $1 a barrel as tit-for-tat US-Iran strikes involving vessels near Hormuz heightened fears of prolonged disruption to Middle Eastern supplies. Iran's planned restricted Gulf zone and a new shipping corridor added to supply fears. The developments sparked worries about the potential impact on Pakistan's import bill and external account, while increasing uncertainty for oil-sensitive sectors.

According to Arif Habib Limited (AHL), Monday saw 175k give way with the KSE-100 declining 0.97% to close at 173.6k and continuing to move towards July lows. Only 12 shares rose while 87 fell with Pakistan Services (+7.55%), Askari Bank (+1.54%), Adamjee Insurance (+3.23%) contributing the most to the index's gains. In contrast, UBL (2.69%) OGDC (2.48%) and Pakistan Petroleum (1.78%) were the biggest drags.

Pakistan Services rallied after media reports of an out-of-court settlement of a dispute that included the company's hotel properties and controlling vote in their operations. Thatta Cement and Fauji Foundation, which were involved in the row, signed a memorandum of understanding for the settlement, the Nukta website reported. However, in a bourse filing, Pakistan Services said it had no knowledge of the contents of the media report and cases relating to its shareholding were sub judice.

Meanwhile, Iran said a deal with Oman to manage shipping through Hormuz was just days away while oil prices continued to rise. AHL predicted that the July low of 170k was the near-term target for the KSE-100 index.

KTrade Securities noted that the trading session remained under pressure as broad-based selling dominated investor sentiment. Sector-wise, selling was evident across banks, oil & gas, cement, fertiliser and refineries. Individually, UBL, OGDC, PPL, MCB, Fauji Fertiliser, Lucky Cement, Bank AL Habib and Attock Refinery were among the major laggards, reflecting widespread profit-taking and risk aversion.

The weakness was further amplified by concerns surrounding elevated international oil prices. "Going forward, rising oil prices remain a key concern for the market, given their potential impact on Pakistan's inflation, external account and macroeconomic stability," it said.

"Investor sentiment is likely to remain cautious and headline-driven. Any moderation in crude prices could provide relief, while further escalation may keep the market under pressure."

Trading volumes decreased to 679.2 million shares versus Friday's tally of 874.3 million. The value of traded shares stood at Rs23.7 billion.

In the ready market, shares of 495 companies were traded. Of these, 154 stocks closed higher, 311 fell and 30 remained unchanged.

Cnergyico Pk led the volume chart with trading in 82.5 million shares, losing Rs0.90 to close at Rs13.02. Foreign investors sold shares worth Rs122.5 million, the National Clearing Company reported.