Stocks lose 216 points as traders remain wary of early termination of IPPs contracts

KARACHI: Stocks closed lower on Thursday amid investor concerns over pre-mature termination of independent power producers (IPPs) contracts.

The Pakistan Stock Exchange’s (PSX) benchmark KSE 100-share index decreased by 216.06 points or 0.25 per cent to 85,453.22 points against 85,669.28 points recorded in the last session. The highest index of the day remained at 86,013.46 points while the lowest level was recorded at 85,425.74 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks closed under pressure amid concerns over the government’s pre-mature termination of IPPs contracts on tariff issues and the unresolved $16 billion China debt re profiling.”

He said that rupee instability and uncertainty over the outcome of the IMF’s tough conditions to end energy subsidies, monitoring government spending, and closure of loss-making SOEs played a catalyst role in the bearish close.

The KSE-30 index decreased by 67.25 points or 0.25 per cent to 27,148.97 points against 27,216.23 points.Traded shares decreased by 93 million shares to 503.75 million shares from 596.052 million shares. The trading value dropped to Rs27.912 billion from Rs31.341 billion. Market capital narrowed to Rs11.161 trillion against Rs11.174 trillion. Of the 430 companies active in the session, 149 closed in green, 213 in red and 68 remained unchanged.

Maaz Mulla, analyst at Topline Securities, said the KSE-100 index experienced a battle between bulls and bears, with the bears ultimately emerging victorious. The index closed at 85,453, down by 216 points or 0.25 per cent. Investors chose to book profits as the index reached an intraday high of 344 points and a low of 243 points.

Two IPPs, HUBC and LPL, published material information that shifted market sentiment, as both IPPs will terminate their contracts early. HUBC announced that, pursuant to the terms of the agreement, the government of Pakistan (GOP) and the Central Power Purchasing Agency-Guarantee (CPPAG) have agreed to settle the company’s outstanding receivables up to October 1, 2024.

Key contributors to the index included PPL, PSO, NBP, PTC, and SEARL, which collectively added 245 points. However, negative movements from FFC, EFERT, HBL, and LUCK deducted 267 points from the index.

The highest increase was recorded in Unilever Pakistan Foods Limited shares, which rose by Rs28.71 to Rs17,700.50 per share, followed by Buxly Paints Limited, which increased by Rs16.70 to Rs183.72 per share. A significant decline was noted in Hallmark Company Limited, which fell by Rs134.72 to Rs1,213.31 per share; Rafhan Maize Products Company Limited followed it, which closed lower by Rs122 to Rs7,028 per share.

Brokerage Arif Habib Ltd stated that the KSE-100 index saw further consolidation at the 86,000 level.In a significant development, Prime Minister Shehbaz Sharif’s cabinet approved the premature termination of power purchase agreements with five producers, including HUBC (-0.61 per cent), as part of a national effort to reduce electricity costs.

HUBC, in alignment with the government’s proposal, agreed to the termination in the national interest. The government has also agreed to settle outstanding dues up to October 1. Following these terminations, the government may be in a position to cut the power tariff by Rs10 per unit, providing relief to consumers, stated the brokerage.

Also, the visit of the Saudi delegation is expected to bring further positive developments.The near-term outlook remains positive as long as the index holds above the 84,000 support level.

PTCL remained the volume leader with 52.237 million shares which closed higher by Rs1.32 to Rs14.52 per share. Hub Power Co XD followed it with 46.573 million shares, which closed lower by 69 paisas to Rs112.73 per share.

Other significant turnover stocks included PIA Holding Company, Pak Petroleum, Hum Network, K-Electric Ltd., WorldCall Telecom, Secure Logistics Gro, Kohinoor Spinning and TPL Properties.In the futures market, 313 companies recorded trading, of which 115 increased, 189 decreased and 9 remained unchanged.