For the second straight session, stocks dropped on Thursday, falling below the 89,000-point mark as a significant correction disrupted a days-long rally driven by expectations of a hawkish stance from the central bank in its upcoming policy announcement on November 4.
The KSE-100 Index of the Pakistan Stock Exchange fell by 1,319.80 points or 1.46%, closing at 88,966.76 points from its previous close of 90,286.56 points.
Analysts attribute this downturn to institutional profit-taking in overbought stocks, which began on Wednesday as equities declined by 577.52 points or 0.64% to 90,286.57 points due to selling pressure near the end of the earnings season.
The Pakistan Stock Exchange lost over 1,300 points amid profit-taking. Arif Habib Limited (AHL) reported that the KSE-100 index saw a 9.7% increase (+7,853 points) in October 2024, achieving its highest monthly return since November 2023.
Samiullah Tariq, Group Head of Research and Product Development at Pakistan Kuwait Investment Company (PKIC), described the market’s dip as a typical correction, which allows for consolidation ahead of potential gains.
Additional factors, including foreign outflows, rising industrial gas tariffs, rupee volatility, and concerns regarding Saudi investors seeking policy stability assurances for a $2 billion investment, dampened sentiment further.
Ahsan Mehanti of Arif Habib Corp remarked that stocks faced sharp declines as institutional investors engaged in profit-taking at the close of earnings season, following strong corporate results.
“Rupee instability and uncertainty regarding the State Bank of Pakistan’s rate decision, influenced by the IMF’s upcoming review of the extended fund facility, further weighed down stocks,” Mehanti added.
The rupee also weakened on Wednesday for the third consecutive session, reaching 277.79 per dollar in the interbank market due to increased dollar demand from importers.
The financial market anticipates that the State Bank of Pakistan (SBP) might cut its policy rate by up to 200 basis points in the November 4 meeting, marking what would be the fourth consecutive cut since June, spurred by decreasing inflation, a narrowing current account deficit, and a boost in workers’ remittances.
