Stocks close lower on unchanged policy rate

Stocks closed lower on Tuesday, with losses seen across the board in index-heavy stocks as investors adopted a cautious stance following the State Bank of Pakistan’s decision to keep the policy rate unchanged at a record high, traders said.

The Pakistan Stock Exchange's (PSX) benchmark KSE 100-share Index fell by 592.49 points or 0.83 percent to close at 71,102.55 points. The highest index of the day remained at 72,119.66 points while the lowest level was recorded at 71,059.63 points. The KSE-30 index decreased by 147.35 points or 0.63 percent to 23,394.66 points.

“Stocks closed bearish near the close of earning season after the SBP maintained tight monetary policy, keeping key policy rate unchanged owing to inflation on geopolitical risks and pending fiscal measures,” said analyst Ahsan Mehanti at Arif Habib Corp.

Mehanti added that the International Monetary Fund’s conditions to pursue structural reforms for the energy sector and falling earnings in the oil, cement, and auto sector played a catalyst role in the bearish close.

Traded shares decreased by 53 million shares to 560.552 million shares from 613.314 million shares. The trading value dropped to Rs25.730 billion from Rs26.314 billion. Market capital lowered to Rs9.746 trillion against Rs9.871 trillion. Of 384 companies active in the session, 113 closed in green, 244 in red and 27 remained unchanged.

Analyst Nabeel Haroon at Topline Securities said a range-bound session was observed at the exchange where the market traded between its intraday high of 592 points and intraday low of 635 points to finally close at 71,103 points.

"The pressure was observed during the latter part of the day as a result announcements came in that depicted a decline in earnings," Haroon added.

Major positive contributions to the index came from PPL, BAHL, FFC, MTL and KAPCO as they cumulatively contributed positive 134 points; whereas SYS, UBL, TRG, DAWH and EFERT lost value to weigh down on the index by -309 points.

The highest increase was recorded in Unilever Pakistan Foods Limited shares, which rose by Rs446.29 to Rs20,000 per share, followed by Al-Abbas Sugar Mills Limited, which increased by Rs43.53 to Rs625.40 per share. A significant decline was noted in Hallmark Company Limited, which fell by Rs90.02 to Rs1,149.12 per share, followed by Sapphire Fibres Limited, which closed lower by Rs69.12 to Rs1,423.33 per share.

Brokerage Arif Habib Ltd said the SBP decision comes amidst speculation among some market participants who had been anticipating a rate cut."The market experienced a sharp 2-day decline, resulting in a decrease of 2.96 percent in the index. However, the decline is now approaching near-term support levels, from where an upside movement is expected to resume."

WorldCall Telecom remained the volume leader with 47.688 million shares which closed lower by 5 paisas to Rs1.28 per share. Pace (Pak) Ltd. followed it with 27.121 million shares, which closed lower by 20 paisas to Rs3.29 per share.

Other significant turnover stocks included Pak Petroleum, Air Link Commun, Fauji Fert Bin, Telecard Limited, Agritech Limited, K-Electric Ltd. and Oil & Gas Dev.In Future Market, 336 companies recorded trading, of which 68 increased, 267 decreased and one remained unchanged.