KARACHI: Stocks fell sharply on Friday amid political uncertainty on the implementation of the Supreme Court order regarding reserved seats, which triggered profit-taking in the overbought stocks.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 share index significantly decreased by 1,721.97 points or 2.10 per cent to 80,117.89 points against 81,839.86 points recorded in the last session. The highest index of the day remained at 81,939.84 points while the lowest level was recorded at 79,812.70 points.
Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks fell sharply lower on rising political uncertainty amid concerns over outcome of SC reserved seat verdict limiting the government’s constitutional powers.”He said over-leveraging, institutional profit taking in overbought scrips and concerns over economic uncertainty amid political noise played a catalyst role in the bearish close.
The KSE-30 index decreased by 584.08 points or 2.22 percent to 25,681.10 points against 26,265.18 points.Traded shares increased by 9 million shares to 479.000 million shares from 470.310 million shares. The trading value rose to Rs27.851 billion from Rs25.349 billion. Market capital narrowed to Rs10.662 trillion against Rs10.854 trillion. Of 446 companies active in the session, 91 closed in green, 305 in red and 50 remained unchanged.
Nabeel Haroon, an analyst at Topline Securities, said KSE-100 index largely remained under pressure during the trading session which can be attributed to political noise as government has indicated resistance against the Supreme Court order in favour of PTI’s claim to reserved seats in the assemblies. Major contributions to the index came from HUBC, FFC, HBL, PPL & UBL, as they cumulatively lost value to weigh down on the index by -717 points.
The highest increase was recorded in Reliance Cotton Spinning Mills Limited shares, which rose by Rs52.03 to Rs630 per share, followed by Khyber Textile Mills Limited, which increased by Rs30.94 to Rs363.08 per share. A significant decline was noted in Rafhan Maize Products Company Limited, which fell by Rs144.43 to Rs7,585.57 per share, Nestle Pakistan Limited followed it, which closed lower by Rs143.47 to Rs7,005 per share.
Brokerage Arif Habib Ltd stated that the stock market ended the week on a flat note, closing at 80,117 points as heavy selling eroded earlier gains. The market’s decline was partly due to the reluctance of the Election Commission to implement a Supreme Court verdict that awarded 24 reserved seats to the PTI, adding to the political uncertainty.
On the economic front, Pakistan’s current account deficit (CAD) for FY24 was reported at $691 million, a substantial decrease from $3.3 billion year-on-year. This marks the lowest CAD in 13 years, attributed to a 6.0 per cent reduction in the trade deficit and an 11 per cent increase in remittances.
In corporate news, the board of Fauji Fertilizer Company Limited (FFC), which saw a decline of 4.73 per cent, approved in principle the evaluation of a potential merger with Fauji Fertilizer Bin Qasim Limited (FFBL), which fell by 2.36 per cent. FFC currently holds 49.88 per cent of FFBL, and the merger is expected to create synergies that could add value to the combined enterprise and enhance future returns to shareholders.
Analysts expect the political noise to subside next week, potentially leading to a recovery from Friday’s losses. Investors will be watching closely for any signs of stabilisation in the political landscape, which could provide a much-needed boost to market confidence.
Waves Home App remained the volume leader with 36.876 million shares which closed higher by 3 paisas to Rs10.07 per share. Fauji Fert Bin followed it with 30.672 million shares, which closed lower by 99 paisas to Rs41.03 per share.
Other significant turnover stocks included Pak Elektron, WorldCall Telecom, Avanceon Ltd, Sui North Gas, K-Electric Ltd., Hub Power Co, PIA Holding Company and Air Link Commun. In the futures market, 306 companies recorded trading, of which 23 increased and 283 decreased.
