KSE-100 falls over 500 points owing to economic uncertainty

Negative sentiment prevailed at the Pakistan Stock Exchange (PSX) on Tuesday as the benchmark KSE-100 Index fell owing to political uncertainty.

The stalemate in talks between the International Monetary Fund (IMF) and government played on investors’ mind and they resorted to offloading their holdings.

By the end of the day, the benchmark index was down 566.79 points or 1.36% to close at 41,150.16.

KSE-100 inches down in range-bound session

Following a brief open in the positive zone, the KSE-100 Index began its descent in initial hour and fell steadily throughout the day.

Across-the-board selling was witnessed with index-heavy sectors including, automobile, cement, chemical, commercial banks, oil & gas exploration companies and OMCs trading in the red.

Experts attributed the decline to a lack of clarity over the resumption of the IMF programme, and deteriorating macroeconomic indicators.

“Uncertainty pertaining to IMF and redemption of mutual funds is driving the negative sentiment at the stock market,” said an economic analyst.

They added that although the government is taking steps like increasing gas tariff to appease the IMF, “our need is urgent, as our foreign exchange are very low, thus the market awaits the disbursement of funds at the earliest.”

They said its the financial results season, and companies are posting earnings that are “more or less good in different sectors.”

However, “the issue is sentiment deteriorates amid macro-economic indicators.”

Faced with critically low US-dollar reserves, the government has banned all but essential food and medicine imports until a lifeline bailout is agreed upon with the IMF.

It has also increased gas prices to generate a revenue of Rs310 billion from the consumers in the next six months to curtail circular debt in the gas sector.

A day after staff level 10-day discussions on the 9th review with the IMF team, Finance Minister Ishaq Dar told the media the government is required to reduce the gas sector circular debt to zero as per one of the prior actions for completion of the review.

A report from Capital Stake stated trade screens turned red at the PSX on Tuesday.

“Indices slipped lower for most part of the day while volumes fell from previous close,” it said. “Analysts attributed the decline to lack of clarity over the resumption of the IMF programme, and the deteriorating macroeconomic indicators.”

On the economic front, car sales stood at 6,021 units were sold by PAMA members in the month of January 2023 against 16,985 units same period last year.

Volume on the all-share index fell to 187.5 million from 192.4 million on Monday. The value of shares rose to Rs7.9 billion from Rs7.7 billion recorded in the previous session.

Sui Southern Gas Company was the volume leader with 16.1 million shares followed by WorldCall Telecom with 14.9 million shares and Oil and Gas Development Company with 12.8 million shares.

Shares of 316 companies were traded on Tuesday, of which 79 registered an increase, 208 recorded a fall and 29 remained unchanged.