Stocks sink to lowest in a month on monetary policy, debt concerns

Stocks fell to their lowest level in a month on Monday as investors book profit ahead of the central bank’s monetary policy decision and worried about the government’s ability to resolve the energy sector’s debt crisis, dealers said.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index slumped 1.6 percent or 1,039.34 points to close at 62,773.72 points, the lowest since Dec. 29. The KSE-30 index also fell by 388.35 points or 1.80 percent to 21,145.82 points.

The State Bank of Pakistan (SBP) kept its policy rate unchanged at 22 percent, as expected by most analysts, citing high inflation.

Across-the-board selling was witnessed among index-heavy sectors including cement, chemical, commercial banks, oil and gas exploration companies, OMCs, power generation and refinery.

“Stocks fell across the board in the earnings season on investor concerns for economic uncertainty amid pending fiscal reforms on circular debt and ailing SOEs post general elections,” said Ahsan Mehanti, an analyst at Arif Habib Corp.

"Geo-political uncertainty and the status quo in the SBP policy amid high inflation played a catalytic role in the bearish close."

Traded shares decreased by 95 million shares to 317.577 million shares from 412.823 million shares. The trading value dropped to Rs10.693 billion from Rs16.185 billion. Market capital narrowed to Rs9.243 trillion against Rs9.359 trillion. Out of 348 companies active in the session, 73 closed in green, 253 in red and 22 remained unchanged.

Analyst Maaz Mulla at Topline Securities said KSE-100 index opened negatively and made an intraday low of 1,095.35 points. “Investors opted to book profits before the announcement of monetary policy and the market also witnessed foreign selling.”

The highest increase was recorded in Unilever Pakistan Foods Limited, which rose by Rs1,000 to Rs22,500 per share, followed by Sapphire Fibres Limited, which increased by Rs97 to Rs1,577 per share. A significant decline was noted in Unilever Pakistan Foods Limited, which fell by Rs99.21 to Rs2,353.16 per share, followed by Siemens (Pakistan) Engineering, which closed lower by Rs26.37 to Rs597.62 per share.

Brokerage Arif Habib Ltd stated that the KSE-100 has entered into its seasonally weak period, signalling a bearish sentiment. "The weekly price target of 62,500 was nearly achieved during the initial session of the week, indicating a swift decline."

Notable downside contributors included EFERT (-4.14 percent), PPL (-3.91 percent), and MARI (-4.05 percent). Conversely, BAHL (+1.33 percent), PAKT (+3.3 percent), and UPFL (+4.65 percent) provided some support to the index.

"With resistance observed at 65,000 points, the prevailing bias suggests further downside momentum for the remainder of the week and into February," the brokerage said.

K-Electric Ltd. remained the volume leader with 46.691 million shares which closed lower by 30 paisas to Rs4.85 per share. P.I.A.C. (A) followed it with 22.938 million shares, which closed lower by 41 paisas to Rs9.93 per share.

Other significant turnover stocks included WorldCall Telecom, P.T.C.L., Treet Corp, Pak Refinery, Fauji Foods Ltd, Pak Int. Bulk, Soneri Bank Ltd and Pak Petroleum.

A total of 319 companies recorded future shares, of which 39 increased, 278 decreased and 2 remained unchanged.