KSE-100 Index falls over 700 points as Pakistan, IMF fail to reach staff level agreement

Negative sentiments prevailed at the Pakistan Stock Exchange (PSX), as the benchmark KSE-100 Index fell over 700 points on Friday as Pakistan and International Monetary Fund (IMF) failed to reach a staff level agreement for the next tranche of loan.

The IMF team left Pakistan without signing staff level agreement, however, Finance Minister Ishaq Dar notified the receipt of Memorandum for Economic and Financial Policies (MEFP) draft .

By the end of the day, the KSE-100 Index was down 724.81 points or 1.71% at 41,762.74 level.

The first session kicked off with a fall and the market extended to close 568 points down. Selling pressure accelerated in the second session and elevated the losses.

IMF optimism: KSE-100 closes at highest level since September 2022

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

The bearish sentiments come amid a delay in the IMF programme, said experts.

The IMF and Pakistani authorities have been unable to reach staff-level agreement after a week-long discussions on 9th review.

On Thursday, the KSE-100 Index had risen over 700 points amid hopes that the IMF programme will be revived soon.

Finance Minister Ishaq Dar had said negotiations between Pakistan and the IMF are “on track” and “we will announce good news soon”. It was widely reported by media that IMF and Pakistan have reached a consensus on reviving the bailout programme, which is crucial for the economy that is now sitting at less than $3 billion of foreign exchange reserves with its central bank.

However, on Friday the IMF said that virtual discussions will continue to finalise the implementation details of policies, implying that an agreement to revive the programme through a staff-level agreement may still take some time as Pakistan moves to execute the prior actions.

It appears there may be some time before Pakistan can officially revive the IMF programme. Experts say Pakistan would need to undertake the measures highlighted in the statement before the staff-level agreement.

A report from Capital Stake stated that the PSX ended last session of the week in red.

“Indices slipped lower and lower for most part of the session, while volumes depreciated from previous close,” it said. “Delay in staff-level agreement with IMF for the completion of the ninth review acted as a negative trigger for investors.”

On the economic front, the foreign exchange reserves held by the SBP dropped $170 million to a mere $2.92 billion. This is the lowest level of reserves since February 2014.

In addition, rupee closed at 269.28 against the US dollar, an increase of Rs1.23 or 0.46%.

Sectors painting the benchmark KSE-100 index in red included, oil and gas exploration (202.31 points), fertiliser (99.49 points), banking (99.16 points).

Volume on the all-share index fell to 281.9 million from 367.4 million on Thursday. The value of shares increased to Rs14.7 billion from Rs13.5 billion recorded in the previous session.

Oil and Gas Development Company was the volume leader with 38.7 million shares followed by Pakistan Petroleum with 28 million shares and WorldCall Telecom with 27.5 million shares.

Shares of 352 companies were traded on Thursday, of which 243 registered an increase, 86 recorded a fall and 23 remained unchanged.