Stocks fall as energy sector suffers from debt plan doubts

Stocks closed lower on Thursday, snapping a three-day winning streak, as investors booked profits in the energy sector amid uncertainty over the government’s plan to reduce circular debt, traders said.

The Pakistan Stock Exchange’s benchmark KSE 100-share Index .KSE ended down 0.81 percent, or 524.43 points, at 64,298.01 points, after hitting a high of 65,213.61 points earlier in the session. The KSE-30 index also fell by 208.02 points or 0.95 percent to close at 21,698.78 points.

“Stocks closed bearish on reports of the government row over MOE (ministry of energy) proposed circular debt management plan to settle power sector circular debt, which was directed to be comprehensive and sustainable,” said Ahsan Mehanti, an analyst at Arif Habib Corp.

Mehanti said the banking sector remained under pressure on falling government treasury yields, while weak earnings in the auto sector, uncertainty over SBP policy amid high inflation and concerns for power and gas sector circular debt reaching over Rs5.73 trillion played a catalytic role in the bearish close.

Traded shares decreased by 19 million shares to 460.691 million shares from 479.982 million shares. The trading value rose to Rs25.248 billion from Rs22.501 billion. Market capital narrowed to Rs9.395 trillion against Rs9.483 trillion. Out of 353 companies active in the session, 102 closed in green, 233 in red and 18 remained unchanged.

Analyst Ali Najib at Topline Securities said it was a profit-taking day at the stock market.

“Continuing yesterday’s momentum, the equities commenced the day on a positive note as the benchmark index made an intraday high at 65,213 levels, gaining 391 points,” Najib said. “However, uncertainty over the circular debt reduction plan jiggled investors’ confidence on energy stocks. Resultantly, a selling spree was witnessed in them, especially in OGDC and PPL.”

Due to the aforementioned selling headwinds, the benchmark index couldn’t hold a 65,000 points psychological level and closed the day’s affair on a negative note at 64,298 points, post three consecutive positive sessions, he added.

During the day, OGDC, PPL, BAHL, HUBC and PSO contributed negatively by losing 510 points, cumulatively. On the flip side, ENGRO, MEBL and EFERT saw some buying interest as they added 137 points.

The highest increase was recorded in Pakistan Tobacco Company Limited, which rose by Rs57 to Rs1,085 per share, followed by Lucky Core Industries Limited, which increased by Rs55.43 to Rs794.52 per share. A significant decline was noted in Rafhan Maize Products Company Limited, which fell by Rs199.98 to Rs8,800.01 per share, followed by Philip Morris (Pakistan) Limited, which closed lower by Rs53.88 to Rs676.12 per share.

Muhammad Shuja Qureshi, an analyst at JS Research, said uncertainty regarding circular debt settlement plan dented the overall sentiment. “Further dips in the market would be an opportunity to accumulate high dividend-yielding stocks.”

Oil & Gas Dev. remained the volume leader with 49.679 million shares which closed lower by Rs10.56 to Rs135.31 per share. K-Electric Ltd. followed it with 48.974 million shares, which closed lower by 16 paisas to Rs5.26 per share.

Other significant turnover stocks included Hascol Petrol, Pak Petroleum, Fauji Fert Bin, Dewan Cement, Pak Int. Bulk, WorldCall Telecom, Air Link Commun and Fauji Foods Ltd.

A total of 311 companies recorded future shares, of which 89 increased, 213 decreased and 9 remained unchanged.