The impact of rising oil prices has cast a shadow on PSX

The Pakistan Stock Exchange ended trading on Monday with a significant decline. Concerns about global oil supply and rising crude oil prices affected investor confidence. As a result, selling in shares of major companies increased, and the KSE-100 index fell below the 168,000-point level.

According to official data from the Pakistan Stock Exchange, the KSE-100 index closed 2,541.20 points, or 1.49 percent down at 167,970.65 points. The index opened the day at 169,830.11 points. It touched a high of 170,437.72 points during trading. Later, selling pressure increased, leading to a low of 167,441.63 points.

The market volatility came at a time when supply concerns are growing in the global energy market. According to a recent market report, the closure of a key crude oil pipeline in Saudi Arabia and tensions related to the Strait of Hormuz have increased concerns about global oil supply. The rise in crude oil prices has also strengthened the risk-aversion trend in Pakistani stocks.

The banking sector appeared to be under the most pressure in the KSE-100. Commercial Banks lost 862.76 points from the index. The Cement sector lost 406.18 points while the Fertilizer sector contributed 297.50 points. Oil & Gas Exploration Companies and Technology & Communication sectors also added pressure to the index.

Among individual stocks, UBL was the biggest detractor. It shed 356.20 points from the KSE-100. FFC contributed 175.70 points and LUCK contributed 163.65 points. OGDC and MCB shed 130.40 and 103.84 points respectively. ([Mettis Global][1])

On the other hand, a few big stocks supported the index. PSEL contributed 118.86 points positively. ATRL added 34.71 points and PPL added 24.69 points. POL and NESTLE also contributed 14.29 and 13.59 points positively, respectively. However, this increase was not enough to reduce the overall selling pressure.

The overall market picture was also weak. The All-Share Index fell 1,583.91 points or 1.53 percent to close at 101,619.88 points. 570.47 million shares were traded in the entire market, while the total traded value was around Rs. 24.67 billion. 492 companies were traded. Of these, 83 shares rose, 373 shares fell, while 36 companies remained unchanged.

The other major index KMI-30 also showed a bearish trend. The index opened at 241,920.00 points and reached a high of 243,607.22 points. However, it later fell to a low of 238,911.45 points. At the end, KMI-30 stood at 239,957.10 points. It fell 3,288.50 points or 1.35 percent.

LUCK was the biggest detractor in the KMI-30, shedding 466.13 points from the index. OGDC shed 371.44 points while FFC shed 338.27 points. ENGROH and MARI shed 276.36 and 198.89 points respectively.

On the other hand, ATRL supported the KMI-30 by 98.86 points. PPL added 70.33 points and CPHL added 8.63 points.

The rise in crude oil prices is of particular importance for Pakistan as the country meets a large part of its energy needs through imports. Rising oil prices could put pressure on import bills, transport costs and business costs. That is why a sudden change in the global oil market could pose a significant risk to Pakistani investors.

On the same day, the State Bank of Pakistan also decided to maintain the policy rate at 11.5 percent. The central bank considered geopolitical tensions and inflation risks as important factors in the economic scenario. Pakistan’s inflation had risen to 11.1 percent in August, while the increase in global oil prices has also increased concerns about future inflation.

Analytically, Monday’s market decline was not limited to just a few companies. Simultaneous selling in major industries and key sectors kept the index under pressure. However, it is premature to call the one-day decline a long-term trend. Global oil prices, regional conditions, rupee appreciation and local economic data may affect the market direction in the coming sessions.