KARACHI:
The Pakistan Stock Exchange (PSX) came under heavy selling pressure on Thursday and lost almost 2,000 points as investors rebalanced their portfolios and took profits amid year-end volatility.
The negative market momentum was also fueled by the sudden border tensions with Afghanistan. As the year neared its end, investors felt additional pressure from the rollover of futures contracts, a weak rupee and foreign fund outflows.
Early in the morning, the market opened steady after a day-long closure on the occasion of Quaid-e-Azam’s birth anniversary. However, selling pressure quickly sent the KSE-100 index tumbling.
Although the market recovered well before midday, it once again began to decline and touched the intraday low of 109.859 towards the close of the day.
“Stocks closed sharply lower amid political uncertainty, concern over the State Bank’s cautious easing of policies and uncertainty over the outcome of deviations in tax collection targets,” noted the CEO of Arif Habib Corp, Ahsan Mehanti.
Pressure arising from rollover of future contracts, rupee weakness and foreign fund outflows was the catalyst for the bearish activity, he added.
At the end of trading, the benchmark KSE-100 index recorded a substantial decline of 1,991.49 points, or 1.77%, and closed at 110,423.32.
Topline Securities wrote in its review that the benchmark index experienced a decline, closing the session with a drop of 1,991 points.
The market was influenced by the increase in leverage and the expiration of December contracts. Additionally, security concerns over the situation along the borders affected investor confidence, he said.
The main drivers of the downward movement were Fauji Fertilizer Company, Oil and Gas Development Company, Pakistan Petroleum, Mari Petroleum and Lucky Cement, which together accounted for a fall of 996 points in the index, Topline added.
Arif Habib Limited (AHL) noted in its report that the KSE-100 index saw a subsequent decline, losing 1.77% day on day.
Some 23 stocks rose and 74 fell, with United Bank (+2.67%), TRG Pakistan (+9.87%) and MCB Bank (+1.67%) contributing the most to the index’s gains.
On the other hand, Fauji Fertilizer Company (-2.92%), Oil and Gas Development Company (-4.65%) and Pakistan Petroleum (-4.34%) were the biggest drags, he said.
AHL expected inflation in December 2024 to fall to 4.1% year-on-year, down from 4.9% the previous month. In monthly terms, it projected a slight increase of 0.07%. “This marks the lowest inflation reading since April 2018, when it stood at 3.96%.”
For year 24, average inflation was estimated at 13.13%, a significant reduction from 30.9% in year 23, it added.
JS Global analyst Muhammad Hasan Ather said the 1.8% drop in the KSE-100 index was due to rising leverage, year-end portfolio adjustments and border security concerns.
Despite the bearish sentiment, market earnings returns suggested the potential for above-average long-term returns, he said.
Additionally, falling interest rates and lower returns on alternative investments indicated that stocks would remain attractive, providing promising opportunities for investors, Ather anticipated.
Analysts at KTrade Securities highlighted that escalating tensions, particularly along the border, and the impending transition to a new US administration contributed to the PSX’s slowdown.
Total trading volumes decreased to 628.03 million shares compared to Tuesday’s figure of 880.6 million.
Shares of 450 companies were traded. Of them, 113 stocks closed higher, 284 fell and 53 were unchanged.
Fauji Foods was the volume leader with 93.3 million shares traded, gaining Rs 1.44 to close at Rs 16.39. It was followed by WorldCall Telecom with 49.9 million shares, losing Rs 0.06 to close at Rs 1.72 and TRG Pakistan with 46.9 million shares, gaining Rs 6.33 to close at Rs 70.45.
During the day, foreign investors bought shares worth Rs 35.5 million, the National Clearing Company of Pakistan reported.
