On Monday, bears dominated the Pakistan Stock Exchange (PSX), dragging down the benchmark KSE-100 index by 1,800 points. Analysts blamed the losses on “political uncertainty.”
At 1:17 pm, the KSE-100 index was down 2.51%, or 1582.45, from its previous closing of 62,943.74 points to 61,361.29.
The index fell by 1819.06 points, or 2.89 percent, from the previous close at 1:34 pm.
It is worth noting that the index fell by 1,200 points on Friday due to the postponement of the general election results announcement, ultimately settling below 63,000.
The stock market began under pressure today, according to Chase Securities’ director of research Yousuf M. Farooq, because of “unresolved political instability over the weekend.”
Farooq pointed out that unpredictability would persist till the political landscape was clear.
He emphasized that despite reports that the International Monetary Fund (IMF) was talking about the circular debt settlement plan with the incoming government, oil exploration companies were under “pressure.”
Positively, he pointed out that remittances for January totaled $2.4 billion and that a current account deficit was also “anticipated.”
He stated, “This could lessen the rupee’s speculative pressure and help the market in the coming days.”
“The delay in the establishment of the government due to lack of clear mandate for one party causes uncertainty among investors,” stated Awais Ashraf, director of research at Akseer Research.
“The probability of the Pakistan Democratic Movement formation persisting raises concerns regarding the implementation of more stringent reforms that are required to reduce the fiscal deficit,” he stated.
Due to delays in the IMF’s approval of the circular debt clearance program, exploration and production businesses, like Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL), saw the worst fall, he claimed.
According to Next Capital Limited’s director of research Shahab Farooq, “investors prefer to be on the sidelines for now,” which is why the PSX opened lower and with bad mood.
He attributed the losses to “persistent uncertainties” about the next government’s formation, anticipations of a “weak coalition government with a strong opposition,” a decline in Pakistan’s foreign bond market value, and the IMF’s “red flag” about the proposed circular debt reduction plan.
“Investor trust in a market selling at attractive valuations is likely to be restored by early government formation that focuses on economic challenges,” he stated.
According to Topline Securities CEO Mohammed Sohail, “coalition government instability and news of delay in settlement of circular debt management plan” caused equities to drop 1,000 points.
Due to market uncertainty regarding a seamless transition back to a stable political leadership, the “unusual delay” in revealing election results ended the turbulent three-session election week on a negative note for stocks on Friday.
Consequently, there was fresh selling pressure on the KSE 100-share index, which ended the short week below 63,000. On Friday, the index lost 2,300 points intraday and the stocks fell like a house of cards due to aggressive selling sparked by an unusually long wait for the election results.
The market ended the session with a reduced loss of 1,200 points, but the index gained some support after the Pakistani Election Commission revealed more results close to the end of trading. Additionally, there were rumors that Standard and Poor’s (S&P) would likely upgrade its sovereign rating from “CCC+” to “B”.
SOURCE: DAWN NEWS