Moaaz Manzoor

The Pakistan Stock Exchange (PSX) commenced the month on a negative note, with the KSE-100 index closing at 112,745, marking a decline of 1,511 points or 1.32%.

Speaking with WealthPK, Ali Najib, Head of Equity Sales at Insight Securities, noted that the session began with an optimistic outlook. The index reached an intra-day high of 114,621 points, reflecting a gain of 365 points. However, the positive momentum quickly faded, as the regional markets succumbed to the selling pressure, dragging the PSX into the red zone for the remainder of the trading session. He said the primary trigger for this sharp decline stemmed from the global economic landscape.

US President Donald Trump's announcement to impose tariffs — 25% on Canadian and Mexican imports and 10% on Chinese goods — reignited fears of a full-fledged trade war among the leading economies. The repercussions were felt across global financial markets, with the investor sentiment turning risk-averse, impacting the PSX as well. “The initial gains in the benchmark index were wiped out, as concerns over global trade uncertainties triggered a wave of selling across major sectors,” he said.

Sector-wise, fertilizer, exploration & production (E&P), and technology sectors witnessed a notable selling pressure. Key contributors to the index's decline included Engro Corporation (ENGROH), Fauji Fertilizer Company (FFC), Mari Petroleum (MARI), Systems Limited (SYS), and Pakistan Petroleum Limited (PPL), collectively dragging the index down by 771 points. On the other hand, some value-hunting was observed by the United Bank Limited (UBL), Lucky Cement (LUCK), Meezan Bank Limited (MEBL), and Saif Textile (SAZEW), adding 184 points to the index.

In terms of market activity, a total of 399.5 million shares changed hands, with a cumulative trading value of Rs22 billion. WorldCall Telecom (WTL) led the volume charts, recording a trade of over 26.2 million shares. Commenting on the market sentiment, Muhammad Waqas Ghani, Deputy Research Head at JS Global, remarked that the current selling pressure was primarily driven by profit-taking in the absence of immediate domestic catalysts. However, he remains optimistic about a market recovery, citing strong macroeconomic fundamentals that could pave the way for a rebound in the near term.

The market downturn underscores the interconnected nature of global trade and equity markets. Protectionist policies and trade restrictions trigger capital flight from riskier assets, as seen in the PSX's decline. However, the fundamentals of the economy — corporate earnings strength, stable inflation, and monetary policy outlook — suggest that this dip is more of a temporary setback rather than the start of a prolonged downturn. If external shocks subside, market recovery seems plausible in the coming sessions.

Credit: INP-WealthPk