Stocks begin week with a dip of 500 points

KARACHI: Stocks fell on Monday amid pre-budget uncertainty and cautious activity ahead of the monetary policy announcement, which reduced the discount rate by 150bps later in the day.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 share Index decreased by 501.46 points or 0.68 per cent to 73,252.56 points against 73,754.02 points recorded in the last session. The highest index of the day remained at 73,915.45 points while the lowest level was recorded at 72,981.35 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks closed under pressure amid pre-budget uncertainty and cautious activity ahead of the SBP’s policy rate announcement.”

He said surging power tariffs; IMF conditions on tax measures for the FY25 budget; and uncertainty over the rollover of the $15 billion China IPP loan repayments played a catalyst role in the bearish close.

The KSE-30 index decreased by 216.17 points or 0.92 per cent to 23,400.51 points against 23,616.68 points.

Traded shares dropped by 209 million shares to 350.721 million shares from 559.550 million shares. The trading value dropped to Rs10.180 billion from Rs20.208 billion. Market capital narrowed to Rs9.854 trillion against Rs9.903 trillion. Of 434 companies active in the session, 133 closed in green, 241 in red and 60 remained unchanged.

Maaz Mulla, an analyst at Topline Securities, said equities began the day positively, with the KSE 100 index reaching an intraday high of 73,915 points (+161 points; up 0.22 per cent) in the morning. However, the benchmark index could not maintain this momentum due to a selling spree at the day’s peak. Consequently, the KSE 100 index slipped into negative territory, closing at 73,252 points (-501 points; down 0.68 per cent).

“Today’s selling pressure can be attributed to investor concerns over potential tax increases on dividends, capital gains, and interest income in the upcoming budget, as well as uncertainty surrounding the monetary policy announcement scheduled for later Monday,” he said.

The decline was significantly impacted by HUBC, FFC, MEBL, OGDC, and PPL, which collectively subtracted 254 points from the index. In contrast, SRVI, PSO, SYS, NATF, and MTL contributed a combined 65 points to the index’s positive side.

The highest increase was recorded in Hoechst Pakistan Limited shares, which rose by Rs49.02 to Rs1,449.02 per share, followed by Service Industries Limited, which increased by Rs24.04 to Rs973.75 per share. A significant decline was noted in Unilever Pakistan Foods Limited, which fell by Rs99.50 to Rs18,100.50 per share, Sapphire Fibres Limited followed it, which closed lower by Rs90.86 to Rs1,408.55 per share.

Brokerage Arif Habib Ltd stated the PSX opened the week on a bearish note as investors keenly awaited the monetary policy committee (MPC) meeting, with widespread speculation about a potential interest rate cut.

The MPC reduced the interest rate by 1.5 bps in the evening to 20.5 per cent.

Market analysts suggest that the interest rate cut could trigger upside movements, but the sustainability of any rally remains questionable ahead of the forthcoming budget announcement.

Despite the potential for short-term counter-trend rallies, the overall price action appears weak, indicating a likelihood of lower levels ahead, regardless of the MPC’s decision. The market remains in a fragile state with the economic landscape and investor sentiment heavily influenced by upcoming fiscal policies and monetary decisions.

Pervez Ahmed Co remained the volume leader with 57.418 million shares which closed higher by one 13 paisas to Rs1.63 per share. Amtex Limited followed it with 33.746 million shares, which closed lower by Re1.00 to Rs4.56 per share.

Other significant turnover stocks included WorldCall Telecom, K-Electric Ltd, Fauji Cement, Hira Textile, Ist Capital Sec, DGK Cement, DS Ind Ltd, and Fast Cables Ltd.

In the futures market, 311 companies recorded trading, of which 102 increased, 198 decreased and 11 remained unchanged.