Karachi: The Pakistan Stock Exchange (PSX) remained under the influence of profit-taking for the second consecutive session on Friday, with the KSE-100 index dropping by 335 points. Despite a positive start, the market experienced significant volatility throughout the day. The index initially rallied to an intra-day high of 85,773.83 but eventually succumbed to selling pressure, closing lower.
Investors were primarily reacting to discouraging economic data. Large-scale manufacturing (LSM) contracted by 2.65% year-on-year in August 2024, raising concerns about the country’s industrial growth. Adding to the pessimism, the State Bank of Pakistan (SBP) released its annual report, predicting a modest economic growth rate of 2.5-3.5% for the fiscal year 2024-25.
As the session progressed, the KSE-100 index dipped to an intra-day low of 85,120.90, driven by significant sell-offs in sectors like exploration and production (E&P) and fertilizer.
“Stocks tumbled due to weak economic indicators, including a 2.65% decline in large-scale manufacturing and the SBP’s subdued growth projection for FY25,” commented Ahsan Mehanti, Managing Director of Arif Habib Corp. He further added that global factors such as declining crude oil prices and continued foreign fund outflows contributed to the market’s bearish trend.
At the close of trading, the KSE-100 index had lost 335.34 points, or 0.39%, settling at 85,250.09. According to Topline Securities, the index extended its downward trajectory from the previous session, reaching a low point of 464 points before closing with a 335-point loss. Investors engaged in profit-taking across multiple sectors, locking in gains from earlier upward movements in the market.
The E&P and fertilizer sectors were among the most affected, with both experiencing significant declines of 225 and 206 points, respectively. Lower-than-expected corporate earnings further weighed on investor sentiment in these sectors.
Arif Habib Limited (AHL) reported that the PSX saw a marginal decline of 0.21% week-on-week. Notably, 49 stocks advanced while 48 declined during Friday’s session, with companies like Hub Power (+5.12%), Pakistan Tobacco (+6.42%), and Bank Alfalah (+1.31%) contributing to the limited gains in the index.
In corporate news, Pakistan Oilfields posted earnings per share (EPS) of Rs9.05 for the first quarter of FY25, marking a steep 74% year-on-year decline and the lowest quarterly earnings since the Covid-19 pandemic (4QFY20).
On the broader economic front, the LSM Index revealed that nine out of 22 sectors experienced negative growth during the first two months of FY25, with significant contractions seen in sectors such as pharmaceuticals, non-metallic minerals, iron and steel, chemicals, and electrical equipment.
Despite the current downturn, AHL remains optimistic about a gradual recovery in the LSM sector. Factors such as improving macroeconomic conditions, a stable currency, and a reversal in the interest rate cycle are expected to support growth in the coming months.
JS Global analyst Mohammed Waqar Iqbal also weighed in, stating that while the market opened with positive sentiment, it ultimately ended the day with a 335-point decline. He noted that trading volumes dropped significantly, with 324 million shares traded, down from 513.3 million on Thursday.
According to Iqbal, investor sentiment shifted throughout the day, leading to the broader market decline. He expects the KSE-100 index to remain relatively flat in the near term as investors continue to adjust their portfolios, reallocating assets from fixed income to equities.
The value of shares traded on Friday was Rs15.7 billion, with shares of 445 companies changing hands. Of these, 170 stocks closed higher, 206 declined, and 69 remained unchanged.
Pakistan Refinery was the most actively traded stock, with 28.5 million shares changing hands, though its share price fell by Rs2.57 to close at Rs23.88. Hub Power followed with 19.7 million shares traded, gaining Rs4.98 to close at Rs102.34. WorldCall Telecom also saw activity with 14.95 million shares traded, though it fell by Rs0.01 to close at Rs1.20.
Foreign investors remained net sellers during the session, offloading shares worth Rs404.3 million, according to data from the National Clearing Company of Pakistan Limited (NCCPL).
The outlook for the PSX in the short term remains cautious, with market participants keeping a close eye on macroeconomic trends, global commodity prices, and domestic political developments. While some sectors may see gradual recovery, the overall sentiment is likely to remain tempered by concerns over economic growth and corporate earnings performance.
