On Tuesday, the KSE-100 Index fell more than 1,350 points to close at a little over 38,300, enveloping the Pakistan Stock Exchange (PSX) in severe economic uncertainty and dismal market sentiment.
Investors were troubled by the impasse in talks with the International Monetary Fund (IMF) regarding the continuation of the bailout program and were also concerned about Pakistan’s economic future.
The KSE-100 Index was trading near 38,342.21 at the close, down 1,378.54 points or 3.47%. The benchmark index has not been at this point in 30 months.
Although trading got off to a good start, selling pressure soon took hold of the market and dragged equities lower. As investors sold their shares, the automotive, cement, banking, chemical, oil, and other industries all experienced losses. The KSE-100 was only dragged deeper into the red as the day went on.
On the political front, the provincial government may send a summary later in the day. The assembly of Khyber-Paktunkhwa is likely to be dissolved.
Musadik Malik, the minister of state for petroleum, stated that in order to restart the IMF bailout program, the government will have to raise gas prices.
On Tuesday, Pakistan and a Russian delegation will meet privately to discuss a long-term trade agreement for oil and liquefied natural gas (LNG) as well as the $3 billion Pakistan Stream Gas Pipeline (PSGP) project.
According to Fahad Rauf, Head of Research at Ismail Iqbal Securities, the equity market has been under pressure recently. Moreover, he said, “political and economic instability is growing daily.” “On the one side, the IMF programme is at a standstill, and on the other, it is unclear if general elections will be held on time or sooner than expected. The ends are both open.
According to Umair Naseer, Director of Research at Topline Securities, market sentiment has been negatively impacted by media reports on Finance Minister Ishaq Dar’s remarks towards the IMF.
“This has raised concerns of a further delay in the resumption of the IMF program,” he said.
“Moreover, the political scenario is also uncertain, creating panic. The default risk is also playing on the minds, as our foreign exchange reserves remain low,” he added.
Naseem noted that people’s frustration is increased by the government’s failure to act on important energy price-related decisions. Similar comments were expressed by Saad Khan, Head of Research at IGI Securities, who claimed that institutional selling has been seen at the exchange as a result of political ambiguity. The market is excited with talk of an impending early election, the man claimed.
In addition, Khan noted that the central bank’s Monetary Policy Committee (MPC) meeting was approaching and that the market anticipated a rate increase of about 100 basis points.
To put a stop to the economic chaos, the market expert demanded that the IMF program resume as soon as possible.
Since the government and IMF have been in talks for several weeks but have not yet reached an agreement, Pakistan’s stock market has been under pressure. With less than one month of import coverage, the delay coincides with declining foreign exchange reserves that have fallen to a level not seen in more than nine years.
The rupee’s decline against the US dollar resumed for the 20th session in a row on the economic front as it lost Re0.32 or 0.14% on Tuesday to close at 228.66. Volume on the All-Share Index increased significantly from 105.5 million on Monday to 205.9 million. Shares traded increased in value from the previous session’s Rs3.2 billion to Rs6.7 billion.
