KSE-100 retreats to its lowest level since July 2020

Investor sentiment at the Pakistan Stock Exchange (PSX) continued to stay weak on Wednesday, as the benchmark KSE-100 Index closed substantially lower despite a partial recovery from an over 750-point fall during intra-day trading. The KSE-100 Index, under pressure for weeks, closed at its lowest level since July 2020.

The decline on Wednesday was mainly driven by delay in the resumption of the International Monetary Fund (IMF) programme and massive economic uncertainty in the country. Additionally, a volatile political situation has continued to dampen sentiment at the PSX.

The benchmark KSE-100 Index did post a minor recovery after buying interest was witnessed in the final minutes. However, it still closed with a fall of 523.48 points or 1.32% to settle at 39,279.43.

On July 30, 2020, the KSE-100 had closed at 39,258.44.

KSE-100 falls 0.88% due to low investor confidence

Trading began on a mixed note but selling pressure gripped the market in the initial hours of trading. The decline accelerated mid-day onward before a minor buying interest erased some of the intra-day losses.

Most sectors ended the session in the red, barring a few auto companies that rejoiced at the State Bank of Pakistan’s (SBP) announcement of rolling back some import restrictions.

Speaking to Business Recorder, Samiullah Tariq, Head of Research at the Pak-Kuwait Investment Company, said uncertainty with regard to the resumption of IMF programme was hammering the equity market. He was of the view that Finance Minister Ishaq Dar’s video address to PSX investors on Wednesday should have lifted the market upward.

Echoing his views, Arif Habib Limited (AHL) Head of Research Tahir Abbas said the government’s delay in accepting the conditions laid down by IMF will make it difficult for Pakistan to secure the next tranche of funding from the global lender.

A report from AHL stated that a bearish session was recorded at the PSX. “The market opened in the green zone but within hours, the bears took charge from the bulls and the market nosedived. News of redemptions and rollover week square-ups caused the index to drop 775.40 points intra-day to close in the red zone.”

However, decent volumes were observed across the board while third-tier companies remained the volume leaders, AHL said.

In his video address to investors, Federal Minister for Finance and Revenue Ishaq Dar on Wednesday had reiterated that “there is no chance that Pakistan will default”, but admitted the country’s economy remained in a “tight spot”.

“Conditions are tight, but Pakistan will move forward. Pakistan will not default,” he said. “I admit that we do not enjoy the same level of foreign exchange reserves ($24 billion) we left back in 2016. But that is not the government’s fault, the fault is in the system and we must ensure that every stakeholder takes part in carrying the country forward.”

Dar stressed that the country’s business leaders should participate in curbing the ongoing “negative propaganda” pertaining to Pakistan’s economy.

On the economic front, the SBP had announced on Tuesday that it was rolling back restrictions it placed on imports from January 2, 2023. The limitations were imposed by the central bank earlier during the year over falling foreign exchange reserves.

Moreover, rupee ended on the losing side for the seventh straight session against the US dollar, falling Re0.22 or 0.1% to close at 226.37.

Sectors driving the benchmark KSE-100 south included technology and communication (138.80 points), banking (114.40 points) and fertiliser (93.84 points).

Volume on the all-share index rose to 258.5 million from 153.7 million on Tuesday. The value of shares traded increased to Rs8.5 billion from Rs5.54 billion recorded in the previous session.

Bank Alfalah was the volume leader with 57.9 million shares, followed by WorldCall Telecom with 22.1 million shares, and K-Electric with 17.8 million shares.

Shares of 340 companies were traded on Wednesday, of which 66 registered an increase, 257 recorded a fall, and 17 remained unchanged.