Shares at PSX reverse gains after upward start

Bears took control of the trade floor on Monday as shares at the Pakistan Stock Exchange (PSX) reversed their short-lived gains in intraday trade, declining more than 400 points after a week of volatility.

The benchmark KSE-100 index climbed by 941.79 points, or 0.82 per cent, to stand at 116,411.13 from the previous close of 115,469.34 at 10:05am.

However, at 1:49pm, selling pressure ensued as the index decreased by 410.08 points, or 0.36pc, to stand at 115,059.26 from the previous close.

Awais Ashraf, director research at AKD Securities, attributed the initial bull run to “stronger-than-expected corporate results from heavyweight companies fuelled a surge in the index at the opening”.

“Meanwhile, the absence of further escalation in tensions between Pakistan and India helped prevent panic selling in the KSE-100,” he added.

Yousuf M. Farooq, director research at Chase Securities, noted, “The market opened slightly higher today and then pulled back as initial excitement faded.”

On a positive note, Farooq said that market sentiment was supported by relief that no major escalation occurred between India and Pakistan over the weekend, along with the country’s monthly current account “in a comfortable position” and corporations “posting strong profits”.

In other positive developments, Farooq added that inflation was at a record low, and the real effective exchange rate (REER) stood at 101.

“The market opened slightly higher today, supported by relief that no major escalation occurred between India and Pakistan over the weekend [following the Pahalgam attack],” he added.

“With most market participants expecting interest rate cuts ahead, there is potential for a rerating of the market’s PE [price-to-earning] multiple,” he said.

“However, a significant upward move will likely require de-escalation between India and Pakistan.”

Mohammed Sohail, chief executive of Topline Securities, also attributed the early positive momentum to “dust settling down” between Pakistan and India after the Pahalgam attack, with “no major incidents” supporting initial market recovery.

Last week, the April 22 attack in Pahalgam saw 26 people, mostly tourists, killed in what is being described as the deadliest armed attack in the disputed Himalayan region since the year 2000.

Since the incident, the nuclear-armed nations had unleashed a raft of measures against each other, with India unilaterally suspending the critical Indus Waters Treaty (IWT) and Pakistan retaliating by threatening to put the Simla Agreement in abeyance and closing its airspace for Indian flights.

AKD Securities noted that the market had remained volatile last week due to escalating geopolitical tensions following the Pahalgam attack, and India’s subsequent suspension of the Indus Waters Treaty with Pakistan in the aftermath of the incident, undermining investor sentiment.