PSX is in a dead end, losing over 1,300 points due to profit-selling splurge

On Thursday, stocks fell below 89,000 points for a second session as a major correction interrupted a days-long rally; This was mainly due to expectations that the central bank would extend its hawkish monetary policy on November 4.

Pakistan Stock Exchange’s benchmark index KSE-100 Stock Index fell to 88,966.76 points, losing 1,319.80 points or 1.46% from the previous close of 90,286.56 points.

Analysts blame corporate profit-taking in overbought scenarios as the main reason for this downward trend that began on Wednesday.

The KSE-100 index rose 9.7% (+7,853 points) on a monthly basis in October 2024 to close at 88,967 points, achieving its highest monthly return since November 2023, brokerage firm Arif Habib Limited (AHL) said in a note.

Topline Securities said in its daily market report that the latest rise was due to policy rate cut expectations.

“However, the decline in treasury bill (market treasury bill) yields at Wednesday’s auction encouraged profit-taking, reflecting a classic ‘buy on the rumor, sell on the news’ pattern,” analysts in Topline research wrote. he said.

Treasury bill yields fell as investors remained wary of October inflation figures and the upcoming monetary policy meeting of the State Bank of Pakistan (SBP).

The cutoff yield on the three-month treasury bill fell by 140 basis points (bps) to 13.8998 percent. The six-month treasury bill yield decreased by 84 basis points to 13.5 percent. The 12-month paper interest rate decreased by 64 basis points to 13.0997 percent.

The largest companies by value traded in today’s session are Sazgar Engineering Works Limited (Rs 2.15 billion), Pakistan State Oil Limited (Rs 1.83 billion), Attock Refinery Limited (Rs 1.57 billion), Pakistan Petroleum Limited (Rs 1, 22 billion Rupees). billion) and TRG Pakistan Limited (Rs995 million).

“The above average activity at Sazgar Engineering Works Limited is attributable to spread/arbitrage transactions recorded in the November futures contract of approximately Rs 2.5 billion,” the brokerage report said.

The sectors that declined the most on the day were the banking and fertilizer sectors, as MCB Bank Limited, Habib Bank Limited, Meezan Bank Limited, Engro Corporation Limited and Engro Fertilizers Limited together pulled the index down by 551 points.

While the daily average trading volume and value were 546 million shares and 24 billion Rupees respectively, K-Electric Limited led this volume with 73.6 million shares.

Pakistan Kuwait Investment Company (Private) Limited (PKIC) Research and Product Development Group President Samiullah Tarık stated that the market is experiencing an expected respite.

“Such corrections are typical in financial markets and allow consolidation ahead of potential future gains,” Tarik said. he added.

Moreover, foreign outflows, rising industrial gas tariffs, rupee instability and concerns about the consequences for Saudi investors seeking assurances of stable government policies for a $2 billion investment also hurt sentiment.

Commenting on the decline, Ahsan Mehanti of Arif Habib Corp said that stocks fell sharply due to corporate profit-taking as the earnings season ended following strong corporate financial results announcements by various big names.

“Instability in the rupee ahead of the International Monetary Fund’s first review of the extended funding facility and uncertainty over the SBP’s decision on key policy rates weighed on equities,” Mehanti said.

The rupee on Wednesday weakened for the third consecutive session on persistent dollar demand from importers, closing at 277.79 per dollar in the interbank market.

The financial market predicts that SBP will reduce the policy rate by up to 200 basis points at its meeting on November 4.

If implemented, this would be the fourth consecutive interest rate cut since June, driven by falling inflation, narrowing current account deficit and increasing remittances.