Despite late recovery, PSX closes bearish

KARACHI:

The stock market experienced continuous fluctuations throughout the week, when it initially faced downward pressure before staging a partial recovery.

The KSE-100 index hit the low of 111,487 points due to factors like the futures rollover week, disappointing corporate earnings and investor concerns over a cautious policy rate cut by the State Bank of Pakistan (SBP). However, the market rebounded in the latter half, closing at 114,256 and reflecting a weekly loss of 625 points (0.54%).

On a day-on-day basis, the PSX on Monday exhibited bearish activity on the back of a slump in global equities and weak crude oil prices. Adding to the market trouble included the uncertainty surrounding talks between the government and Pakistan Tehreek-e-Insaf (PTI), the monetary policy decision later in the day and concerns over the proposed Tax Laws Amendment Bill.

Despite a promising start, when the KSE-100 index surged to the intra-day high of 716 points, it reversed course, closing down by 1,360 points.

Next day, the PSX came under pressure and registered hefty losses as the benchmark KSE-100 index dropped nearly 1,500 points. Adding to the negative sentiment were poor financial results from key oil sector players and the rollover of January positions.

On Wednesday, stocks once again closed lower, driven by selling pressure due to the rollover of futures contracts and concerns over a cautious policy rate cut. As a result, the KSE-100 index largely traded in the negative zone and registered a decline of 543 points.

On Thursday, the bourse staged a strong recovery, where the index surged 1,719 points. Optimism grew over corporate earnings, the IMF proposal to reduce gas-sector circular debt and commitments made by a US investor delegation.

On the last trading day of the week, the market enjoyed a robust rally that propelled the KSE-100 index higher by 1,049 points as banking and cement sectors led gains on the back of investor optimism.

Arif Habib Limited (AHL) wrote in its weekly review that the market remained negative initially, with the index declining to a low of 111,487 points, driven by factors such as the rollover week, company results falling short of expectations and worries over the cautious SBP policy rate cut. However, the market recovered in the latter part of the week and closed at 114,256.

Among economic news, the SBP reduced policy rate by 100 basis points to 12% while the central bank’s reserves decreased $76 million WoW to $11.4 billion. Pakistani rupee depreciated slightly by 0.08%, concluding the week at 278.97 against the US dollar, it said.

Sector-wise, negative contribution to the stock market came from fertiliser (477 points), oil marketing companies (208 points), pharmaceuticals (85 points), engineering (62 points) and exploration and production (60 points).

Meanwhile, the sectors that contributed positively were commercial banks (612 points), cement (82 points), automobile assemblers (75 points), miscellaneous (28 points) and automobile parts and accessories (9 points).

Stock-wise, negative contributors were Fauji Fertiliser Company (458 points), OGDC (124 points), PSO (110 points), Bank Alfalah (89 points) and Hubco (70 points).

Foreigners’ selling was witnessed during the week, which clocked in at $4.1 million compared to net buying of $5.6 million last week. Average volumes arrived at 498 million shares, down 28.8% WoW, while average traded value settled at $98.5 million, down 20.6% WoW, AHL added.

JS Global analyst Abdul Basit wrote that the KSE-100 experienced mixed trends and closed at 114,256 points, down 0.5% WoW. The week commenced with the monetary policy committee’s announcement of a 100-basis-point reduction in policy rate, taking cumulative reduction to 1,000 basis points since June 2024 amid an ongoing disinflationary trend.

He pointed out that Pakistan significantly improved its external financing position, as highlighted by the SBP governor, having repaid $6.4 billion during FY25, with remaining balance of $3.6 billion due by June 2025.

In other news, a high-level US business delegation visited Pakistan to strengthen trade and bilateral relations – the first visit since the Trump administration took office, the analyst added.