Shares at the Pakistan Stock Exchange (PSX) fell sharply on Monday, with the benchmark KSE-100 index dropping 579.26 points, or 1.43 percent, to close at 39,871.27 points.
Around 3:26 pm, it hit an intraday low of 606.14 points or 1.52 percent.
Two analysts blamed the mosque blast in Peshawar’s Police Lines neighborhood, which left 28 people dead and more than 150 injured, for the stock market’s decline.
Salman Naqvi of Aba Ali Habib Securities claimed that quickly after the blast’s news broke, the index began to decline.
He highlighted further factors, such as the weakening of the rupee and the increase in gasoline prices, which would cause inflation to rise in the coming months and cause the interest rate to rise further.
Mohammad Arbash, senior manager of equity at Topline Securities, concurred with Naqvi’s assessment, claiming that investor confidence was being weakened by political sentiment as well as prospects for increased inflation in the upcoming months.
Raza Jafri, the head of equity at Intermarket Securities, noted that the index lost some of its gains from the previous week since it was unclear whether Pakistan’s last-minute efforts to restart the stalled International Monetary Fund (IMF) project would be successful.
Even if the loan programme were to be restarted, if the IMF programme came to an end in June, there would still be worries about the country’s ability to balance its budget.
“A lot more comfort on economic outlook is needed for a sustainable rally at the bounce,” he commented.
The local currency fell to a record low when the government eliminated an unofficial ceiling on the USD-PKR exchange rate last week. It also disclosed a rise in petrol prices of Rs35.
The actions are intended to restart the IMF loan programme, which has been halted. The conclusion of the ninth review will release $1.2 billion and open up inflows from friendly nations, and a group from the international money lender is due to come to Pakistan tomorrow to address this topic.
Pakistan needs to complete the review to stave off the risk of default as its foreign exchange reserves depleted to $3.7bn, not enough to cover even three weeks of imports.
