PSX feels pressure ahead of monetary policy

KARACHI:

The Pakistan Stock Exchange (PSX) remained under pressure on Wednesday as investors were cautious ahead of the mid-March monetary policy announcement and possible negotiations with the International Monetary Fund (IMF) on a new loan package.

In the morning, trading started on a high and the market rose in the early hours. Buying activity was seen throughout the first half as investors warmed to Prime Minister Shehbaz Sharif’s instructions to start talks with the IMF on an expanded capital facility (EFF).

Bulls dominated proceedings until midday, soon after the KSE-100 touched an intraday high of 66,150.94.

Market sentiment then turned negative as investors weighed the potential impact of the upcoming monetary policy announcement and resorted to cautious trading.

They went for profit booking in the last hour, pushing the stock market slightly into the negative territory. The index lost nearly 70 points to close below the 66,000 mark.

“Equities closed lower on investor speculation ahead of March 18 monetary policy announcement and concerns over public debt reaching Rs 64.84 trillion, up 6.6% for July-Jan’24,” said Arif Habib Corp MD Ahsan Mehanti.

“The fall in the rupee and uncertainty over the IMF’s new terms for a long-term bailout to meet the $6 billion debt service shortfall in FY24 played the role of catalysts in the market’s bearish close.”

At the close, the KSE-100 index was down 69.42 points, or 0.11%, at 65,656.62.

Topline Securities Deputy Head of Sales, Ali Najib, in his report, said “the 66,000 level is a tough nut to crack.”

“Pakistani stocks started the business on a positive note. The buying momentum can be attributed to the government’s focus on the economy, reflecting the prime minister’s instructions to the finance ministry to open talks with the IMF on the ongoing standby agreement, which will lead to the release of the final $1.2 billion tranche , and in the potential new program about $6-8 billion,” he said.

However, investors chose to resort to some speculation above 66,000 points, which pushed the index to give up earlier gains.

Engro Corporation, Mari Petroleum and TRG Pakistan saw some selling as they lost 114 points, Topline added.

Arif Habib Limited (AHL) reported that there was an “additional twist” of about 66,000 before hitting new all-time highs.

“S&P Global says it is closely monitoring Pakistan’s external financing situation for the next financial year and there is no doubt about the nation’s ability to meet its debt obligations by June. The key is securing IMF financing,” said Yee Farn Phua, S&P’s principal analyst in Singapore.

“Once the IMF program starts and the government starts working on the policies mentioned in the program, bilateral partners will also come for FY25,” AHL added.

JS Global analyst Mubashir Anis Naviwala said profit-taking continued across the board. “The market opened in the green zone, but could not sustain that momentum,” he said.

“Going forward, we recommend investors adopt a buy-on-dips strategy in the banking, E&P and technology sectors,” the analyst added.

Total trading volume rose to 419.7 million shares from Tuesday’s 396.6 million. The value of shares traded during the day was Rs 18.3 billion.

Shares of 354 companies were traded. Of these, 163 stocks closed higher, 172 declined and 19 remained unchanged.

Cnergyico PK was the volume leader with 30.7 million shares traded, gaining Rs 0.04 to close at Rs 4.63. It was followed by Pakistan International Airlines with 28.1 million shares, gaining Rs 0.71 to close at Rs 14.51 and Pakistan Refinery with 28.04 million shares, losing Rs 0.44 to close at Rs 28.52.

Foreign investors were net buyers of shares worth Rs 143.1 million, according to NCCPL.

Published in The Express Tribune, March 7^u2024.

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