KARACHI: The stock market closed lower on Monday due to concerns of a rate decrease ahead of the monetary policy statement, while briefly reaching a new all-time high over the 73,000 level in early trade.
According to Ahsan Mehanti of Arif Habib Corporation, the market saw a widespread selling frenzy due to expectations for a cautious monetary policy from SBP, with risks associated with resolving circular debt crises, tax rate adjustments, fiscal consolidation, and geopolitical noise.
Bearish mood, according to him, was also influenced by institutional profit-taking in a few overbought equities and possible structural changes for the IMF’s new initiative to eliminate subsidies in the gas, fertilizer, and energy sectors.
Topline Securities Ltd reported that before two significant events later in the day—a monetary policy review and the IMF board meeting to approve the final payment under the $3 billion Stand-By Arrangement—equities started the week on a mixed note.
There was roughly a 50/50 split between “no-change” and 50-100bps decrease in street view. The $1.1 billion tranche will also probably be approved by the IMF Executive Board because Pakistan was able to secure a Staff-Level Agreement last month after a successful evaluation.
The KSE 100 index reached new highs as investors increased their holdings in some stocks, building on last week’s strong momentum. However, profit-taking near the day’s highs forced the benchmark index to give up previous gains.
The sectors that contributed most to the sell-off were power, fertilizer, and exploration and production (E&P); Hub Power, Engro Fertilizers, Fauji Fertilizer, Oil and Gas Development, and Mari Petroleum removed 497 points from the index.
However, because there was some purchasing interest in Fauji Fertilizer Bin Qasim Ltd, National Foods, and Highnoon Laboratories Ltd, they all added 71 points collectively.
Consequently, the index experienced a record high of 73,300.75 during the day and a low of 71,764.18. Nevertheless, it lost 1,047.71 points, or 1.44 percent, from the previous session and ended at 71,695.03 points.
