Stocks stumble amid budget uncertainty, tough IMF reforms

KARACHI: Stocks closed lower on Tuesday despite lower inflation numbers as investors remained uncertain ahead of the 2025 federal budget, fearing tough monetary reforms under the IMF programme.

The Pakistan Stock Exchange’s (PSX) benchmark KSE 100-share Index decreased by 908.6 points or 1.2 per cent to 74,666.66 points against 75,575.26 points recorded in the last session. The highest index of the day remained at 75,669.76 points while the lowest level was recorded at 74,592.74 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks slumped amid uncertainty ahead of Federal Budget FY25.”He said the fall in the rupee, weak global crude oil prices, political uncertainty, dismal data on POL sales for July-May’24 down by 9.0 per cent, hike in power tariffs, and reports of cut in proposed development spending in the federal budget played a catalyst role in bearish close.

The KSE-30 index decreased by 292.88 points or 1.21 per cent to 23,918.72 points against 24,211.61 points.Traded shares dropped by 27 million shares to 414.479 million shares from 441.261 million shares. The trading value dropped to Rs18.311 billion from Rs18.634 billion. Market capital narrowed to Rs10.061 trillion against Rs10.182 trillion. Of 452 companies active in the session, 99 closed in green, 280 in red and 73 remained unchanged.

Ali Najib, an analyst at Topline Securities, said equities initiated on a positive note as the KSE 100 index made an intraday high at 75,670 level (+95 points; up 0.12 percent) in the morning.However, the benchmark index could not withstand 75k due to the selling spree at the day’s high. Resultantly, the KSE100 index went into negative and closed the day’s affairs at 74,666.66 levels (-909 points; down 1.20 per cent).

He said that concerns for additional austerity measures in the upcoming budget (scheduled on Jun 12th, as per media reports) and fears of further restriction in the next IMF programme can be attributed to the selling pressure the market witnessed.

The tech, E&P and power sectors contributed negatively to the index as SYS, MARI, HUBC, OGDC and PPL lost 341 points, cumulatively. On the flip side, LUCK, HMB and HINOON saw some buying interest as they cumulatively added 33 points.

The highest increase was recorded in Sapphire Fibres Limited shares, which rose by Rs31.51 to Rs1,438.94 per share, followed by Philip Morris (Pakistan) Limited, which increased by Rs10.39 to Rs600 per share. A significant decline was noted in Mari Petroleum Company Limited, which fell by Rs83.44 to Rs2,672.60 per share, Rafhan Maize Products Company Limited followed it, which closed lower by Rs68.83 to Rs7,926.64 per share.

Brokerage Arif Habib Ltd stated PSX saw significant declines on Tuesday, with key benchmarks plummeting below crucial support levels, signalling potential further downside.The KSE-100 index fell below the 75,000 mark, and the KSE-30 dropped below 24,000, indicating increased bearish sentiment in the market. This decline follows earlier hints of downside follow-through, now materializing with authority.

With the KSE-100 index now firmly below 75,000, analysts predict further declines, potentially targeting the 70,000 level. This sharp drop reflects the market’s heightened caution and the prevailing bearish outlook.

Market participants will be closely watching the coming sessions for any signs of stabilization or further decline, as these movements will be crucial in determining the near-term direction of the PSX.

As investors digest these developments, the focus will remain on key economic indicators and policy decisions that could influence the market sentiment, going forward.

Fauji Cement remained the volume leader with 36.618 million shares which closed lower by Rs1.15 to Rs22.51 per share. K-Electric Ltd. followed it with 35.198 million shares, which closed lower by 14 paisas to Rs4.87 per share.

Other significant turnover stocks included WorldCall Telecom, Hum Network, Netsol Tech, Dewan Motors, Amtex Limited, National Bank XD, Air Link Commun and TRG Pak Ltd. In the futures market, 311 companies recorded trading, of which 27 increased, 277 decreased and 7 remained unchanged.