Investor interest dampened by holiday lull, regional situation and policy uncertainty
KARACHI:
In a typically subdued pre-Eid trading session, the KSE-100 index of the Pakistan Stock Exchange (PSX) plunged nearly 4,700 points amid cautious investor participation and thin volumes.
The benchmark index experienced significant volatility, swinging between the intra-day high of 153,944 and low of 148,748. Persistent selling pressure eventually dragged the market lower, with the index closing at 149,178.66, registering a decline of 4,687.51 points, or 3.05%
Investor interest was dampened by escalating geopolitical tensions in the Middle East, particularly over fears of oil shipment disruptions through the Strait of Hormuz. On the domestic front, uncertainty about potential fuel price adjustment and Pakistan’s loan programme review by the International Monetary Fund (IMF) turned investors wary.
Talking to The Express Tribune, analysts attributed the prevailing dullness at the PSX largely to pre-holiday caution as many participants chose to stay on the sidelines ahead of Eid break.
JS Global Head of Research Waqas Ghani commented that the KSE-100 index remained under pressure as macroeconomic uncertainty, coupled with geopolitical tensions, weighed on investor sentiment. The prevailing risk-off approach prompted investors to adopt a cautious stance, leading to increased volatility. “While uncertainty prevails in the short term, some sort of macroeconomic stability can help restore investor confidence,” he said.
Echoing similar views, KTrade Securities equity trader Ahmed Sheraz said the KSE-100 opened on a negative note and subsequently faced intensified selling pressure amid thin volumes, reflecting the typical pre-Eid lull in market activity. Investor sentiment remained fragile due to the Middle East conflict and concerns over oil supply disruptions in the Strait of Hormuz. In addition, uncertainty about a possible domestic fuel price hike and the IMF review also undermined confidence, he said.
Global oil prices extended gains as the Gulf war threatened key export facilities, stoking fears about Pakistan’s fragile economic recovery owing to a higher import bill. The government has absorbed an estimated fiscal impact of Rs23 billion to keep fuel prices unchanged while securing alternative fuel cargoes from Gulf countries to mitigate the impact of disruption, Sheraz added.
According to Arif Habib Limited (AHL), the week began with another sharp downside move as the KSE-100 index fell 3.05% to below 150,000 points. Some 12 shares rose while 86 fell with Fauji Fertiliser (-3.8%), United Bank (-4.41%) and Habib Bank (-5.6%) being the biggest drags on the index.
Meanwhile, Chinese Foreign Minister Wang Yi urged Afghanistan and Pakistan to resolve their dispute through dialogue rather than force. Additionally, Pakistan’s exports slowed down in the past two weeks ahead of a heavy oil import payment and over $1 billion Eurobond repayment after Eidul Fitr next week.
AHL said the last three Mondays (-9.57%, -6.99% and -3.05%) had seen aggressive downside moves, which marked the low of the respective week, as nervous investors observed weekend events and sold stocks after seeing no end to the ME conflict. It anticipated that index levels below 150k should continue to create demand for Pakistani equities.
Topline Securities mentioned that the KSE-100 index closed the session with a decline of 4,687 points. The market remained under pressure throughout the day, with the index largely trading in negative territory as investors adopted a cautious approach amid ongoing volatility in international oil prices.
Market activity remained relatively subdued, reflecting limited investor participation. The total traded volume stood at 298 million shares while the traded value came in at Rs20 billion. Among major index movers, Fauji Fertiliser, UBL, Engro Holdings, Hub Power and HBL emerged as key laggards, dragging the market down by 1,881 points, it said.
