📉 PSX Market Update: Profit-Taking Drives KSE-100 Down by 380 Points

KARACHI – July 23, 2025
The new week at the Pakistan Stock Exchange (PSX) started on a quieter note as investors shifted gears to lock in profits, triggering a notable decline in the benchmark KSE-100 Index, which ended the session down by nearly 380 points. The market experienced a cautious and range-bound trading session, reflecting investor uncertainty ahead of the July contract expiry.

This report unpacks the reasons behind the market's pullback, which stocks influenced the movement, how volumes fared, and what this could mean for investors moving forward.

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📊 What Happened in the Market?

On Monday, July 21, the KSE-100 index opened with some early optimism but soon lost its strength. The index spent most of the session moving sideways, showing minimal volatility but failing to maintain any upward traction.

By the end of the trading day, the KSE-100 had dropped by 379.78 points (or 0.27%) to settle at 138,217.58. This pullback came after an intra-day high of 139,201 and a low of 138,150, showing a narrow fluctuation range of just over 1,000 points, reflecting a range-bound sentiment.

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📉 Why the Dip? A Look at Profit-Taking and Expiry Pressure

Market analysts point to investor profit-taking as the key reason for the decline. With July-end futures contracts approaching expiration, many investors opted to cash in on recent gains, especially after strong performances in earlier sessions.

Topline Securities, in its daily market commentary, highlighted that the day’s trading was dominated by investors booking profits ahead of contract expirations. This, combined with a lack of strong triggers or breaking news, led to a cautious and directionless session.

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🏢 Which Stocks Pulled the Market Down?

Several heavyweight companies dragged the index lower. According to analysts, five major stocks collectively contributed to a 438-point drag on the KSE-100:

1. Fauji Fertilizer Company (FFC)

2. United Bank Limited (UBL)

3. Oil and Gas Development Company (OGDC)

4. Systems Limited (SYS)

5. Hub Power Company (HUBC)

These stocks are widely held and typically influence market direction, so even modest dips in these counters had a ripple effect on the broader index.

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🧩 Who Provided Support?

Despite the drop, a few stocks did help cushion the blow. The following names added 152 points back into the market:

• Habib Bank Limited (HBL)

• Engro Fertilizers

• Pakistan Aluminium Beverage Cans

These stocks showed resilience, supported by strong earnings expectations, investor confidence, or sector-specific strength.

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💬 Expert Opinion: Where Could the Market Be Headed?

Ali Najib, Deputy Head of Trading at Arif Habib Limited, provided key insights into the market’s technical picture.

“The 135,000 level is a critical support zone for the KSE-100. If that level holds, we might see a rebound driven by strong earnings reports and continuous foreign inflows.”

He further explained that if the index falls below this support zone, it could dip to 132,000, where attractive valuations and expectations of interest rate cuts might prompt buyers to re-enter the market.

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💼 Trading Volumes: Slight Decline but Still Strong

Total market activity showed a small drop compared to the last session. According to PSX data:

• Total shares traded: 608.2 million (vs. 609.4 million on Friday)

• Total value of traded shares: Rs23.5 billion

This minor dip in volume indicates that while some investors stayed on the sidelines, overall market participation remained healthy.

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🔁 Market Breadth: Mixed Sentiment

Out of 479 companies whose shares were traded:

• 193 closed in the green (gained value)

• 245 ended in the red (lost value)

• 41 remained unchanged

This mixed result reflects the uncertain investor mood, with neither bulls nor bears taking full control.

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🔝 Volume Leader: First Prudential Modaraba

One of the most actively traded stocks of the day was First Prudential Modaraba, with:

• 58.7 million shares changing hands

• Stock price rose by 48 paisa

• Closing price: Rs4.98

Its strong volume suggests retail investor interest, likely due to its lower price and potential short-term momentum.

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📈 What’s Fueling Market Sentiment?

🔸 1. Corporate Earnings Season

Investors are keeping a close eye on quarterly earnings reports, especially from the banking, energy, and fertilizer sectors. While some companies have reported strong numbers, others are still to release results.

The market is likely to react stock-specific based on earnings performance.

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🔸 2. Foreign Portfolio Investment (FPI)

Foreign investors have been showing renewed interest in Pakistan’s stock market, especially in large-cap names. This is due to:

• Stable rupee

• Softer inflation

• Speculation of interest rate cuts

Continuous foreign inflows have played a big role in keeping market levels supported, even during pullbacks.

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🔸 3. Macroeconomic Stability

The Pakistani rupee has remained stable, and inflation appears to be cooling down. While challenges remain (like external debt and fiscal pressure), investors are hopeful that IMF-backed reforms will continue to stabilize the economy.

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📉 Risks Ahead

Despite optimism, there are still risks that investors are watching closely:

• Political uncertainty: Any unrest or policy change can spook investors.

• Delay in policy reforms: Especially regarding energy pricing and privatization.

• Inflation shocks: If fuel or food prices rise again, investor confidence could weaken.

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💡 What Should Investors Do Now?

If you're currently in the market or planning to enter, here are some actionable suggestions:

✅ Do:

• Keep an eye on earnings reports

• Watch technical levels like 135,000 and 132,000 on the KSE-100

• Invest in high-dividend or undervalued blue-chip stocks

• Stay informed about macroeconomic indicators

❌ Avoid:

• Chasing speculative stocks without research

• Panic-selling on small dips

• Ignoring global and local news flow (especially interest rates and political shifts)

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🧠 Final Thoughts

The start of the week may have seen the KSE-100 index drop by 380 points, but this is not a cause for panic. It is a natural part of market cycles, especially when investors choose to book profits after previous gains.

With solid corporate performance, steady foreign inflows, and potential policy support from the government, the medium to long-term picture for PSX remains promising — as long as key support levels hold and macro fundamentals stay intact.

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📌 Summary (Key Points Recap)

Factor	Details
Index Drop	KSE-100 fell by 379.78 points to 138,217.58
Top Drags	FFC, UBL, OGDC, SYS, HUBC
Support Stocks	HBL, Engro Fertilizers, Pakistan Aluminium
Volume Leader	First Prudential Modaraba – 58.7M shares
Total Companies Traded	479 – 193 up, 245 down, 41 unchanged
Total Trading Value	Rs23.5 billion
Market Outlook	Neutral to cautious; key support at 135,000

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