Stocks fall due to changing political scenario

KARACHI:

The Pakistan Stock Exchange (PSX) on Thursday fell nearly 2 percent to around 61,000 points as the race between different political parties intensified to form a new government, sparking concerns among investors who refrained from building new positions.

In the morning, the session started on a dull note as selling pressure weighed on investor sentiment due to post-election political uncertainty.

The stock market remained lower throughout the day, touching an intraday low of 60,926.85 about an hour before the close of trading.

Moreover, fears of the Economic Coordination Committee’s (ECC) decision to further hike gas prices kept investors at bay. The market continued to plummet, losing over 1,100 points in the end.

“Stocks fell broadly amid political noise as new coalitions emerged for the prime minister’s post,” said Arif Habib Corp MD Ahsan Mehanti.

“Default risks amid political volatility, policy uncertainty and the ECC’s approval to hike gas prices for industrial and residential consumers to recover an additional Rs 242 billion acted as catalysts for the market to close higher.”

At the close, the KSE-100 index was down 1,133.78 points, or 1.82%, at 61,020.06.

Topline Securities, in its commentary, described the day as “a bolt from the blue”.

Pakistan stocks started their business on a positive note, but the benchmark started to fall sharply after the news that the Pakistan Tehreek-e-Insaf (PTI) was also in talks with different parties to form the new government, he reported. “This development knocked the positive market momentum with a feather.”

The exploration and production (E&P), power, banking and fertilizer sectors were negative contributors to the index as Oil and Gas Development Company, Pakistan Petroleum, Hub Power, United Bank and Engro Corporation shed 438 points, Topline added.

Arif Habib Limited (AHL), in its report, noted that the KSE-100 turned negative as political temperatures rose. “Volatility is very high as headline news dominates,” it said.

Reading PSX bounces back on MSCI index revision

Meezan Bank (+0.18%) reported QCY23 earnings per share (EPS) of Rs 15, up 65% y-o-y (y-o-y) and dividend per share of Rs 8. For the full CY23, its EPS stood at Rs 47.72, up 90% YoY, and the dividend came in at Rs 20 per share.

Pakistan State Oil (PSO) reported 1HFY24 EPS of Rs 16.51 against a loss per share (LPS) of Rs 7.16 in the same period last year. In 2Q24, it recorded LPS of Rs 30.12 against LPS of Rs 9.71 in the same period of the previous year amid higher inventory losses.

“February is again proving to be a weak seasonal period for the KSE-100,” AHL added.

JS Global analyst Mohammed Waqar Iqbal said the KSE-100 index saw selling pressure throughout the day due to the resurgence of political uncertainty. “Broad-based selling was seen,” he said.

“Going forward, we recommend investors view any bearish trend as a buying opportunity in banking and fertilizer sectors,” the analyst added.

Total trading volumes rose to 345.1 million shares from Wednesday’s 303.9 million. The value of shares traded during the day was Rs 11.9 billion.

Shares of 344 companies were traded. Of these, 85 stocks closed higher, 238 declined and 21 remained unchanged.

K-Electric was the volume leader with 33.3 million shares traded, shedding Rs 0.14 to close at Rs 4.33. It was followed by Pakistan International Airlines Corp with 28.6 million shares, gaining Rs 0.89 to close at Rs 10.61 and Media Times with 22.4 million shares, gaining Rs 0.61 to close at 1.98 Rs.

Foreign investors were net sellers of shares worth Rs 125.99 million, according to NCCPL.

Published in The Express Tribune, February 16^u2024.

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