Stocks drop for third day as politics overshadow rate-cut hopes

Stocks fell for a third straight session on Wednesday, as political uncertainty and weak global cues weighed on investor sentiment, despite expectations of a rate cut after bond yields dropped at an auction.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index closed down by 170.13 points or 0.27 percent to 63,567.34 points, after touching a high of 64,043.87 and a low of 63,290.18 during the day. The KSE-30 index also closed flat with a decline of 1.67 points or 0.01 percent to 21,354.25 points.

"Stocks closed lower on geo-political uncertainty and political noise," said Ahsan Mehanti, an analyst at Arif Habib Corp.

He said a slump in global equities, weak oil prices and uncertainty over the central bank's key policy rate announcement this month played a catalytic role in the bearish close. Traded shares increased by 14 million shares to 421.331 million shares from 407.543 million shares. The trading value rose to Rs18.579 billion from Rs12.646 billion. Market capital narrowed to Rs9.310 trillion against Rs9.331 trillion. Out of 332 companies active in the session, 111 closed in green, 203 in red and 18 remained unchanged.

Analyst Ali Najib at Topline Securities said it was another day of bulls and bears rivalry. “Equities moved in both directions as bullish and bearish forces confronted throughout the session to take the helm at PSX,” Najib said.

“However, bears emerged as a winner as the KSE 100 index called the day at 63,567 levels (-170 points; down 0.67 percent).” Investors switched between selective stocks of power, energy, fertilizer, auto, tech and cement sectors. Resultantly, HUBC, PPL, FFBL, MTL, TRG and LUCK lost 236 points, cumulatively. On the flip side, ENGRO, EFERT, MEBL and UBL collectively added 253 points as they witnessed rejuvenated buying interest.

The highest increase was recorded in Philip Morris (Pakistan) Limited, which rose by Rs51.24 to Rs734.50 per share, followed by Bata Pakistan Limited, which increased by Rs33 to Rs1,733 per share. A significant decline was noted in Rafhan Maize Products Company Limited, which fell by Rs401.50 to Rs8,801 per share, followed by Pak Suzuki Motor Company Limited, which closed lower by Rs53.74 to Rs662.77 per share.

Muhammad Shuja Qureshi, an analyst at JS Research, said selling in the refinery sector dented the overall sentiment. "In addition, selling continued in OGDC, PPL and PSO while buying was witnessed in selective stocks." “A cautious stance is advised, investors can accumulate value stocks on dips,” he advised.

PTCL remained the volume leader with 45.978 million shares which closed higher by 45 paisas to Rs14.02 per share. K-Electric Ltd. followed it with 41.567 million shares, which closed lower by 20 paisas to Rs5.59 per share.

Other significant turnover stocks included Treet Corp, PIAC (A), Fauji Fer Bin, Pak Petroleum, WorldCall Telecom, PSO, Pak Int. Bulk and Fauji Foods Ltd. A total of 314 companies recorded future shares, of which 71 increased, 240 decreased and 3 remained unchanged.