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Markets

KSE-100 falls over 1% owing to economic uncertainty

  • Stalemate over IMF programme, rumours of interest rate hike by SBP keep investors on sidelines
Published February 20, 2023

Pessimism prevailed at the Pakistan Stock Exchange (PSX) on Monday and the KSE-100 Index fell 1.08% owing to economic uncertainty and stalemate between Pakistan and the International Monetary Fund (IMF) with regard to the resumption of bailout programme.

In addition, rumours stating that the State Bank of Pakistan (SBP) will hold an emergency meeting to hike interest rate spooked sentiment at the equity market and investors remained on the sidelines.

By the end of the trading session, the benchmark index was down 444.97 points or 1.08% to close at 40,673.64.

KSE-100 reports meagre gain owing to absence of positive triggers

Trading began with a dip and the market remained in the red throughout the day.

Index-heavy cement, automobile, chemical, fertiliser, banking and oil and gas exploration sectors saw modest selling activity and closed in the red.

A report from Arif Habib Limited stated that a negative session was recorded to kick off the week.

“The market opened in the red and continued to trade in that region, reaching an intraday low of -494.64 points on speculation of a policy rate hike in the coming days. Given the country’s political turmoil, investors chose to remain on the sidelines, resulting in significant volume declines across the board, while third equities remained in the spotlight.”

In its report, Capital Stake stated that trade screens turned red at the PSX on first session of the week.

“Indices slipped lower and lower for most part of the day, while volumes dropped from last close,” it said. “Uncertainty over an agreement with the IMF caused the slump. Moreover, a possible hike in the interest rate by SBP also shook investors’ confidence.”

On the economic front, rupee maintained its positive momentum against the US dollar for the fifth successive session, appreciating 0.36% or Re0.94 in the inter-bank market on Friday to close at 261.88.

Pakistan’s current account deficit (CAD) shrank by more than 67% during the first seven months of this fiscal year (FY23) due to a significant decline in the import bill, with the negative gap during January alone recorded at $0.242 billion, a decline of 90% YoY.

Net foreign direct investment (FDI) in Pakistan grew in January 2023 as it more than doubled to $222.6 million against $110 million in the same month of 2022.

Sectors painting the benchmark KSE-100 in red included oil and gas exploration (139.06 points), banking (95.04 points) and fertiliser (44.92 points).

Volume on the all-share index plunged to 92.7 million from 110.4 million on Friday. The value of shares retreated to Rs4.5 billion from Rs4.7 billion recorded in the previous session.

WorldCall Telecom was the volume leader with 6.4 million shares followed by Oil and Gas Development Company with 5.4 million shares and TRG Pakistan with 4.4 million shares.

Shares of 313 companies were traded on Monday, of which 65 registered an increase, 225 recorded a fall and 23 remained unchanged.

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