Stocks under pressure over policy rate concerns M Haris

Pakistan Stock Exchange (PSX) on Wednesday continued its bearish trend and lost nearly 450 points amid uncertainty surrounding the State Bank of Pakistan (SBP)’s policy rate announcement ahead of the federal budget presentation.

Earlier, the market opened on a positive note but soon investor sentiment turned bearish as the day progressed. The KSE-100 index took a deep dive before midday as concerns grew over the SBP’s upcoming monetary policy announcement.

Stock selling in banking and exploration and production (E&P) sectors fuelled the downward trend. Rumours of higher taxes on capital markets in the FY25 budget also dampened investor interest.

The index recovered significantly due to selective buying but the trend reversed again towards the end of trading when the market hit its intra-day low at 74,136.52 points. The KSE-100 closed near the day’s low with significant losses.

“Stocks closed sharply lower amid ongoing rumours of higher taxes on capital markets in the federal budget for FY25 and uncertainty about the SBP’s policy rate stance,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Political noise and dismal data of fertiliser offtake for May 2024 played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index lost 447.22 points, or 0.6%, and settled at 74,219.44.

Topline Securities, in its commentary, noted that Pakistan’s stock market experienced a decline.

The negative trajectory was primarily influenced by weaknesses in the banking and exploration sectors, it said. Companies such as Habib Bank, Oil and Gas Development Company, Bank Alfalah, Bank AL Habib and Pakistan Petroleum collectively contributed to a loss of 225 points.

However, some positive contribution came from Engro Fertilisers, Faysal Bank and TRG Pakistan, which added 37 points to the index. “Trading activity remained strong throughout the day,” Topline added.

Arif Habib Limited (AHL), in its report, wrote that 30 shares rose while 66 fell with Habib Bank Limited (-2.8%), Oil and Gas Development Company (-2.18%) and Bank Alfalah (-3.56%) being the biggest contributors to the downside.

On the other hand, Engro Fertilisers (+0.56%), Faysal Bank (+2.43%) and TRG Pakistan (+0.99%) provided the major support.

“Pressure remains lower with the 75.5k and 24.2k expected to cap any gains for the KSE-100 and KSE-30, respectively,” AHL added.

JS Global analyst Mubashir Anis Naviwala said correction continued across the board at the PSX due to uncertainty about the policy rate cut and the upcoming budget.

The market opened with very low volumes, he said. “Moving forward, we recommend investors to take advantage of any downside as an opportunity to buy stocks in construction and export-oriented sectors,” the analyst added.

Overall trading volumes decreased to 348.5 million shares against Tuesday’s tally of 414.5 million. The value of shares traded during the day was Rs16.4 billion.

Shares of 441 companies were traded. Of these, 127 stocks closed higher, 246 dropped and 68 remained unchanged.

K-Electric was the volume leader with trading in 25.3 million shares, losing Rs0.01 to close at Rs4.86. It was followed by Amtex Limited with 23.6 million shares, gaining Rs1 to close at Rs3.56 and WorldCall Telecom with 16.1 million shares, losing Rs0.02 to close at Rs1.32.

Foreign investors were net buyers of shares worth Rs170.6 million, according to the NCCPL.

Published in The Express Tribune, June 6^th, 2024.

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