KSE-100 plunges nearly 700 points due to IMF uncertainty

The Pakistan Stock Exchange (PSX) witnessed massive selling pressure in the afternoon on Monday as the benchmark KSE-100 fell 680 points amid concerns over the country’s pending bailout programme with the International Monetary Fund (IMF).

At close, the benchmark index settled at 40,621.22, a decline of 680.08 points or 1.65%.

Fifth session in red: KSE-100 falls 0.16% after volatile session

The sell-off was in sharp contrast to the earlier subdued trading at the PSX, which remained range-bound for a major part of the session.

In final hours, however, across-the-board selling was witnessed among index-heavy sectors including automobile, cement, chemicals, commercial banks, fertiliser, oil & gas exploration companies and OMCs.

Experts attributed the sudden fall to the continued uncertainty over resumption of the IMF programme, which has remained stalled since November last year.

“There are reports that as per the IMF’s Executive Board’s meeting schedule till June 29, Pakistan is not part of any agenda,” Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited, told Business Recorder.

“This has led to a negative reaction from investors.”

The expert said the prime minister’s reported statement regarding re-engagement of talks with the international lender was also seen negatively among market participants.

Last week, there was considerable activity on the IMF front, as the lender first stated it was dissatisfied with the budget proposals announced by Finance Minister Ishaq Dar.

It was followed by a tit-for-tat response by the Finance Division that looked to justify its measures. However, it also categorically stated that it is looking to reach an amicable solution and complete “at least the ninth review”.

Meanwhile, experts say a revival of the IMF programme is crucial for the cash-strapped economy. The ongoing programme remains scheduled to end on June 30.

A report by Bloomberg on Monday also raised concerns over the IMF programme, stating that default odds rise if the bailout is not revived by June-end.

A report from Capital Stake underlined that investors at PSX witnessed a bloodbath on the first trading session of the week.

“After a small incline in the beginning of the session, indices slipped lower and lower while volumes rose from last close,” it said.

A report from Arif Habib Limited stated that the week began with a negative session at the PSX.

“Following the news of the Chinese loan rollover, the benchmark KSE-100 index opened in the green,” it said. “Later in the day, however, the bears made a comeback and pulled the index down due to rumours in the market about the stalled IMF programme.”

Investor involvement was sluggish, with third-tier equities dominating, the report said.

Sectors painting the benchmark KSE-100 index in red included oil and gas exploration (140.43 points), technology and communication (102.31 points) and banking (98.17 points).

Volume on the all-share index rose to 179.8 million from 156 million on Friday, while the value of shares traded surged to Rs5.6 billion from Rs3.8 billion recorded in the previous session.

WorldCall Telecom was the volume leader with 27.7 million shares followed by K-Electric with 11.4 million shares and Cnergyico PK with 9.3 million shares.

Shares of 320 companies were traded on Monday, of which 54 registered an increase, 244 recorded a fall and 22 remained unchanged.