The Pakistan Stock Exchange (PSX) succumbed to uncertainty during trading on Wednesday, as its benchmark KSE-100 Index closed 170 points lower despite a positive start on expectations of rate cut by the State Bank of Pakistan (SBP).
At the start of the session, investors brushed off concerns over rising tension between Iran and Pakistan after Tehran said it launched missile strikes in Balochistan with focus instead staying on bond yields.
This pushed the KSE-100 Index to an intra-day high of 64,043.86, up by 306.4 points, However, investors resorted to booking gains and at 1:40pm, the KSE-100 index was at 63,417.30, down by 320.16 points or 0.50%.
The index did witness some late-session buying that helped it trim losses.
At close, the KSE-100 settled at 63,567.34, down by 170.13 points or 0.27%.
KSE-100 extends losses amid lack of positive triggers
“This is normal profit-taking as the market has seen growth in recent weeks” Samiullah Tariq, Head of Research at Pak Kuwait Investment Company, told Business Recorder.
The earlier increase was attributed by Mohammed Sohail, CEO at brokerage house Topline Securities, to the market’s recovery after fall in bond yields.
“(Iranian development) is not material so far,” Sohail told Business Recorder via message after trading began.
Investors have been incorporating a decline in the key policy rate – which currently stands at 22% – with the three-year cut off declining by 40 basis points (bps), 5-year cut-off falling 38bps, and the 10-year decreasing 50bps in the latest auction of Pakistan Investment Bonds (PIBs) conducted by the SBP.
The KSE-100’s performance is being closely followed after developments on Tuesday when it was reported that “two bases of Jaish al Adl in Pakistan were targeted by missiles”, according to Iranian state media, a day after Iran’s elite Revolutionary Guards attacked targets in Iraq and Syria with missiles. The strikes took place in the border town of Panjgur in Balochistan, according to reports.
Pakistan confirmed the strike had taken place, and strongly condemned the unprovoked violation of its airspace by Iran and the strike inside Pakistani territory. Islamabad said the strike also resulted in death of two children and injured three girls, a development that dramatically escalates regional tension between the two neighbours.
Meanwhile, the rupee registered marginal gains against the US dollar on Wednesday, appreciating 0.05% in the inter-bank market. As per the State Bank of Pakistan, the local unit closed at 280.1, a gain of Re0.15 against the greenback.
Volume on the all-share index increased to 421.3 million from 407.5 million a session before.
The value of shares declined to Rs18.5 billion from Rs12.6 billion in the previous session.
P.T.C.L. was the volume leader with 46 million shares, followed by K-Electric Ltd. with 41.5 million shares, and Treet Corp at 36.4 million shares.
Shares of 332 companies were traded on Wednesday, of which 111 registered an increase, 203 recorded a fall, while 18 remained unchanged.