PSX rout enters 3rd day on minibudget frets

Capital market rout entered third day on Wednesday as reports of a likely mini budget sent jitters down the market with investors bracing for even bigger blows as government executes IMF's rigorous conditions.

Pakistan Stock Exchange (PSX)’s benchmark KSE-100 Shares Index shed 584.82 points or 1.30 percent to close at 44363.70 points.

Topline Securities in its post-trading note observed equities continued Tuesday’s negative momentum as investors remained worried over monetary tightening and ambiguity over IMF (International Monetary Fund) loan programme.

This led the market to open sideways and hit an intraday low of 740 points with major pressure coming from LUCK, Engro, HBL, and MCB that cumulatively dented the index by 290 points, the brokerage added.

Arif Habib Limited in its commentary said the bears continued to dominate bulls for the third straight session as investors feared a minibudget was in the making.

Moreover, IMF had rejected Pakistan’s request to keep a door open for borrowing from the central bank and also did not agree on any meaningful accountability of the State Bank of Pakistan (SBP), the brokerage house said.

It further said the stocks remained under pressure on the third day of the roll-over week despite attractive valuations.

Institutions held a cautious stance because of concerns of foreign selling spree around the upcoming MSCI re-balancing.

Analyst Ahsan Mehanti at Arif Habib Corp said selling pressure was witnessed across the board amid foreign selling, surging bond yields, and rupee instability.

Weak global equities, likely minibudget, taxes, austerity over PSDP, petroleum development levies on IMF conditions upon release of next tranche kept the stocks bearish.

JS Research in a note said the market reacted negatively to the announcement of a minibudget, removal of GST exemption, and roll-over settlement, while selling pressure persisted during the whole day.

“We recommend cautious approach as market is likely to face further pressure in the upcoming sessions; an overhang of pre-conditions related to IMF programme continues to dent the market sentiments,” the JS report said.

Market turnover went up to 310.388 million shares against 264.608 million shares in the previous trading day whereas traded value improved to Rs12.947 billion against Rs9.728 billion a day earlier. Market capital declined to Rs7.62 trillion from Rs7.71 trillion in the previous trading session. The share value of 76 companies gained, 245 companies lost, and 20 remained unchanged. According to SBP’s annual report, released on Wednesday, Pakistan’ economy rebounded during FY21, with real GDP growth rising to 3.9 percent.

Importantly, this expansion in economic activity was accompanied by a 10-year low current account balance that contributed to a significant build-up in foreign exchange reserves, the central bank said. The report added that the fiscal deficit also edged down despite Covid-related spending, leading to an improvement in the public debt-to-GDP ratio, unlike the experience of most countries across the world.

The best gains of the day were recorded by Bhanero Textile as the stock closed higher by Rs64/share, followed by Gatron Industries that secured an increase of Rs38.13 in its share value.

After losing Rs100/share, Rafhan Maize emerged as the worst loser of the day, followed by Sapphire Fiber, whose share value went down sharply by Rs65.05. The volume leader was TRG with 26.52 million shares traded during the session. Stocks that registered notable turnovers were Pakistan Ltd, World Telecom, TPLP, Telecard Limited, Byco Petroleum, G3 Technologies, Hum Network, Fauji Foods, Unity Foods and Treet Crop.