Stocks tumble as policy jitters rattle investors

Stocks ended sharply lower on Tuesday, with the KSE 100-share Index closing down by 953.60 points, or 1.45 percent, to 64,801.70, as investors braced for the upcoming monetary policy announcement and an International Monetary Fund (IMF) review, traders said.

The benchmark index, which started the day on a positive note, reaching an intraday high of 65,859.64 points, succumbed to selling pressure, dragging it to a low of 64,664.67 points. "Stocks closed bearish on a weak rupee and uncertainty over the monetary policy announcement on March 18 amid high inflation and the IMF review starting March 14," said Ahsan Mehanti, an analyst at Arif Habib Corp.

The finance minister's remarks about fiscal year 2024 being challenging, coupled with concerns over a surge in industrial gas tariffs and the uncertain outcome of talks with the IMF for new loans, contributed to the negative sentiment.

The KSE-30 index also fell by 264.16 points, or 1.20 percent, to 21,747.77 points. Traded shares decreased by 227 million shares to 321.709 million shares from 548.764 million shares. The trading value dropped to Rs10.857 billion from Rs16.605 billion. Market capital narrowed to Rs9.228 trillion against Rs9.360 trillion. Of 328 companies active in the session, 57 closed in green, 254 in red and 17 remained unchanged.

Ali Najib, an analyst at Topline Securities, noted that the market could not sustain the 65,000 level due to profit-taking and a broad sell-off, which he attributed to concerns over the forthcoming monetary policy and potential new taxes following the government's IMF negotiations.

"The equities kicked off the day on a positive note as the KSE 100 index made an intraday high at 65,860 level in the morning. However, at the day’s high, profit-taking initiated and subsequently converted into an across-the-board selling spree," Najib said

"The aforementioned selling trend can be accredited to apprehensions associated with the forthcoming monetary policy announcement and the anticipation of likely further tax imposition in the aftermath of the government’s dialogues for a new International Monetary Fund (IMF) program."

The fertilizer, E&P and power sectors contributed negatively to the index as DAWH, OGDC, PPL, HUBC and ENGRO lost 341 points, cumulatively.

The highest increase was recorded in Shahmurad Sugar Mills Limited shares, which rose by Rs17.28 to Rs390.28 per share, followed by Pakistan Services Limited, which increased by Rs12.35 to Rs844 per share.

A significant decline was noted in Nestle Pakistan Limited, which fell by Rs97.77 to Rs7,480 per share, followed by Sazgar Engineering Works Limited, which closed lower by Rs31.71 to Rs401.15 per share.

Brokerage Arif Habib Ltd said Prime Minister Shehbaz Sharif appointed a former banker as Finance Minister, signalling a shift towards utilizing technocrats to navigate the economy and negotiate new loans from the IMF.

"Looking ahead, the MPC is scheduled to convene on March 18, 2024, raising speculation of a potential interest rate reversal cycle," the brokerage said. "There is a strong possibility that the State Bank of Pakistan (SBP) may consider initiating this cycle with a 100 basis points cut in the upcoming policy."

Hascol Petrol remained the volume leader with 29.322 million shares which closed lower by 36 paisas to Rs8.14 per share. P.I.A.C.(A) followed it with 28.898 million shares, which closed higher by 7 paisas to Rs18.10 per share.

Other significant turnover stocks included Cnergyico PK, Kohinoor Spining, Air Link Commun, PTCL, K-Electric Ltd., WorldCall Telecom, Bank Al-Falah and Telecard Limited. In Future’s Market, 313 companies recorded trading, of which 13 increased, 298 decreased and 2 remained unchanged.