KARACHI: The stock market snapped its record-setting spree as investors indulged in aggressive profit-taking in the post-rate cut session on Tuesday despite hitting an all-time high above 117,000 intraday.
Ahsan Mehanti of Arif Habib Corporation said the equities turned bearish amid cautious SBP policy easing on multiple risks, static core inflation near 9.7pc and 0.64pc contraction in Large-Scale Manufacturing during July-October.
He added that consolidation amid concerns for government tax collections shortfall, weak global crude oil prices and unresolved slippages in IMF targets under the $7bn Extended Fund Facility contributed to the downturn at PSX.
However, trade and industry leaders, barring representatives of foreign investors and multinationals, termed the rate cut inadequate and insisted on a single-digit policy rate to revive economic activities as inflation had hit its 78-month lowest at 4.9pc in November.
Topline Securities Ltd said the market witnessed extreme volatility as investors digested the Monetary Policy Committee’s (MPC) latest decision. The State Bank of Pakistan (SBP) announced its fifth consecutive rate cut, reducing the policy rate by 200bps to 13pc.
The benchmark index experienced significant swings, reaching an intraday high of 869 points at 117,039.18 before plunging to an intraday low of 2,480 points at 113,688.55. Ultimately, the index settled at 114,860 points, marking a decline of 1,308 points or 1.13pc day-on-day.
Profit-taking gained momentum in the latter half of the session, amplifying volatility and further pressuring the market downward.
The downward trajectory was primarily driven by Mari Petroleum, Fauji Fertiliser, Lucky Cement, Oil and Gas Development Company, and Pakistan Petroleum, collectively contributing a staggering 1,696 points to the index’s decline.
Ali Najib, Head of Sales at Insight Securities, said investors chose to trim their positions by booking profit after the overnight rate cut. As a result, the benchmark index could not withstand the strong selling headwinds and took a nosedive.
He didn’t rule out further pruning ahead of calendar year-end. However, any correction should be treated as an opportunity for value-hunting as the market draws strength from its strong fundamentals, which will continue to attract fresh inflow, he remarked.
The trading volume dipped 14.8pc to 1.25 billion shares while the traded value fell 5.86pc to Rs62.72bn day-on-day.
Published in Dawn, December 18th, 2024
