Below-expectation results drag down PSX

Pakistan Stock Exchange (PSX) on Monday exhibited bearish activity on the back of a slump in global equities and weak crude oil prices. Adding to the market trouble included the uncertainty surrounding talks between the government and Pakistan Tehreek-e-Insaf (PTI), monetary policy decision by the State Bank of Pakistan (SBP) later in the day and concerns over the proposed Tax Laws Amendment Bill.

Despite a promising start, when the KSE-100 index surged to the intra-day high of 716 points, the market reversed course, closing down by 1,360 points, or 1.18%, at 113,520.32.

Weaker-than-expected earnings from Mari Petroleum, among other factors, dampened investor sentiment, contributing to the negative momentum. However, despite the downturn, there was cautious optimism among analysts that a potential rate cut could revive interest.

Ahsan Mehanti of Arif Habib Corp commented that stocks turned bearish amid a slump in global equities and weak global crude oil prices.

He added that uncertainty over the outcome of talks between the government and PTI, the SBP’s policy rate decision to be announced later in the day and worries over the proposed Tax Laws Amendment Bill, which restricts non-filers from making stock purchases, played the role of catalysts in the bearish activity.

At the close of trading, the benchmark KSE-100 index recorded a decrease of 1,360.16 points, or 1.18%, and settled at 113,520.32.

In its review, Topline Securities stated that the market opened on a positive note, with the index touching an impressive intra-day high of 716 points.

However, the momentum was short-lived as bears swiftly took charge. The index plunged to the intra-day low of 1,398 points before closing at 113,520, marking a decline of 1,360 points, or 1.18%, it said. The negative trend could largely be attributed to weaker-than-expected financial results of Mari Petroleum, which dampened investor sentiment. The company reported earnings per share (EPS) of Rs9.3, with no cash payout, which came in below market expectations and contributed significantly to the bearish activity, Topline said.

The brokerage house said that Pakistan Oilfields declared 2QFY25 results, where the company posted EPS of Rs26.7, taking 1HFY25 earnings to Rs35.7 per share, along with cash dividend of Rs25 per share.

JS Global analyst Muhammad Hasan Ather commented that the KSE-100 index saw a significant dip, mainly led by uncertainty about the monetary policy committee decision and a few below-expected results. Despite the downtrend, there was optimism that a substantial rate cut could positively impact market sentiment. Investors were looking forward to the results season, expecting significant dividends from some banks and fertiliser firms, Ather added.

Ali Najib of Insight Securities remarked that the PSX resumed the week on a positive note, however, selling headwinds compelled the benchmark index to lose earlier gains.

The main culprit behind Monday’s pessimism was Mari Energy, which reported EPS of Rs9.3 for 2QFY25, significantly below street expectation of Rs12.5, with no dividend. Post-result announcement, the stock lost more than 8% and pulled the index down by 375 points, Najib observed.

Later, he added, the SBP announced a reduction of 100 basis points in its policy rate that reached 12%.

Overall trading volumes decreased to 494 million shares compared with Friday’s tally of 632 million. Shares of 442 companies were traded. Of these, 97 stocks closed higher, 298 fell and 47 remained unchanged.

Sui Southern Gas Company was the volume leader with trading in 51.65 million shares, falling Rs4.39 to close at Rs39.53. It was followed by Cnergyico PK with 50.7 million shares, falling Rs0.14 to close at Rs7.57 and WorldCall Telecom with 29.1 million shares, falling Rs0.06 to close at Rs1.73. Foreign investors bought shares worth Rs385.7 million.