Stocks edge lower ahead of central bank policy decision, IMF talks

Stocks ended slightly lower on Thursday, as investors remained cautious ahead of the central bank's monetary policy decision next week and amid concerns over the International Monetary Fund's (IMF) bailout terms.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index closed down 0.08 percent, or 53.53 points, at 65,603.09, after touching a high of 66,874.15 and a low of 65,187.69 during the session.

The KSE-30 index fell 0.51 percent, or 112.96 points, to 22,113.40.

"Stocks closed lower on economic uncertainty," said Ahsan Mehanti, an analyst at Arif Habib Corp. "Uncertainty over monetary policy announcement on Mar 18, weak rupee on falling FX reserves, and concerns over IMF new terms for higher taxation, power tariff reforms for long term bailout played a catalyst role in bearish close."

The central bank is expected to announce its monetary policy on March 18, with analysts divided over whether it will cut interest rates after soft inflation number for februray or keep them unchanged in the near-term.

The government has also planned to approach the IMF for a new loan programme, which may require tough fiscal and structural reforms. The oil sector outperformed on strong financials and the government revised the refinery policy supporting up gradation.

Trading volume decreased to 354.153 million shares from 419.737 million shares in the previous session, while trading value dropped to Rs14.435 billion from Rs18.296 billion. Market capitalisation narrowed to Rs9.330 trillion from Rs9.343 trillion. Of the 354 companies traded, 145 closed higher, 187 lower and 22 unchanged.

Analyst Maaz Mulla at Topline Securities said the KSE-100 index witnessed a volatile session marked by an intraday high of 217.53 points and an intraday low of 468.94 points, ultimately closing at 65,603.08 level, reflecting a decline of 53.54 points.

On the political front, newly elected Prime Minister Shehbaz Sharif has pledged to devote himself tirelessly to resolving the country's crisis, with expectations that his cabinet members' names will be finalised within the next 48 hours.

In the cement sector, D.G. Khan Cement Co Ltd, Pioneer Cement Ltd and Kohat Cement Co Ltd closed positively as international coal prices dropped to $100 per tonne.

The banking, oil exploration, fertilizer, and power sectors made positive contributions to the index, with Oil and Gas Development Co Ltd, Pak Elektron Ltd, Hub Power Co Ltd, Pakistan Petroleum Ltd, and Dawood Hercules Corp Ltd collectively adding 134 points.

However, Bank Al Habib Ltd, MCB Bank Ltd, Engro Corp Ltd, and Meezan Bank Ltd experienced selling pressure, resulting in a collective loss of 121 points.

The highest increase was recorded in Unilever Pakistan Foods Ltd shares, which rose by Rs400 to Rs21,900 per share, followed by Rafhan Maize Products Co Ltd, which increased by Rs111.12 to Rs9,000 per share.

A significant decline was noted in Nestle Pakistan Ltd, which fell by Rs310 to Rs7,890 per share, followed by Mehmood Textile Mills Ltd, which closed lower by Rs22.50 to Rs378.50 per share.

Brokerage Arif Habib Ltd stated that the benchmark index tested the support zone at 65,000-65,500, reaching a low of 65,188, before ultimately closing above 65,600.

In significant developments, Moody's upgraded its outlook on the Pakistani banking sector from negative to stable. The baseline credit assessment for Pakistan's largest five banks—National Bank of Pakistan, Habib Bank Ltd, United Bank Ltd, MCB Bank Ltd, and Allied Bank Ltd—was affirmed at Caa3.

"Following the recent consolidation of around 66,000 and the successful test of near-term support, the KSE-100 index is poised to surpass the 66,000 mark in the upcoming sessions," the brokerage said.

Pak Elektron remained the volume leader with 31.074 million shares, which closed higher by Rs1.61 to Rs23.24 per share. Telecard Ltd followed it with 22.636 million shares, which closed higher by Rs0.09 to Rs8.57 per share.

Other significant turnover stocks included Pakistan International Airlines Corp, WorldCall Telecom Ltd, Cnergyco PK Ltd, Kohinoor Spinning Mills Ltd, K-Electric Ltd, Bank of Punjab, Treet Corp Ltd and Oil and Gas Development Co Ltd.

In the futures market, 313 companies recorded trading, of which 119 increased, 183 decreased and 11 remained unchanged.