The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) witnessed a bearish trend on Monday mainly due to uncertainty over energy circular debt and monetary policy.
According to the PSX website, the KSE-100 index closed in the red zone after dropping 1,039 points or 1.63% to settle at the 62,773 level.
Market experts attribute the dip in the stocks to the circular debt in the energy sector and the interim government’s efforts about a settlement plan.
“Investors will keep a close watch on what the caretaker government can push through before elections, especially progress on circular debt settlement, which whipsawed OGDC and PPL last week. We remain positive on Pakistan equities, with room for significant gains if elections and a new IMF program are navigated smoothly,” said Intermarket Securities Limited.
The State Bank of Pakistan’s Monetary Policy Committee (MPC) announced no change in policy rate.
However, earlier today, Shahid Ali Habib, CEO, Arif Habib Limited clearly suggested: “Monetary policy committee should consider the projected inflation numbers for the next 12 months while deciding the policy rate today. Although December CPI recorded at 29.66% however the rate is sharply coming down to 19.84% for March and 17.47% for May YOY. This clearly indicates that the policy rate should come down by 4% from 22% to 18% by June this year and then 3% more to reach 15% by December.”
The market experienced broad-based selling pressure in sectors with significant weight on the index, including cement, chemicals, commercial banks, oil and gas exploration companies, OMCs, power generation, and refinery sectors.
OGDC and PPL, which heavily influence the index, also incurred losses due to uncertainty surrounding the resolution of the circular debt problem in the energy sector.
Companies across major sectors on the KSE All Share Index displayed a mixed trend.
In the automobile sector, Honda Atlas Cars’ share price rose by Rs 0.9, despite reporting a reduction in profits by 11% in their nine-month financial results.
Fauji Fertilizer Company’s share price decreased by Rs 1.2, a notable move for a major player in the fertilizer sector, following their announcement regarding corporate briefing details for the year ended December 31, 2023.
International Steel Limited’s share price saw an increase of Rs 0.8 on the same day as they reported a profit after tax (PAT) of Rs 2,353 million in 6MFY24.
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