KSE-100 ends below 40,000 level amid IMF uncertainty

The benchmark KSE-100 Index fell below the 40,000 level while volumes plunged on Friday as uncertainty over revival of the International Monetary Fund (IMF) programme and continuous political volatility played on investors’ minds.

At close, the benchmark index settled at 39,942.05, witnessing a decrease of 434.05 points or 1.08%. On a weekly basis, the KSE-100 was down 3.36%.

Across-the-board selling pressure was witnessed throughout the day as index-heavy sectors including automobile, cement, chemical, banking, oil, fertiliser and pharmaceutical sectors ended in losses.

Talking to Business Recorder, Sana Tawfik, an analyst at Arif Habib Limited (AHL), said the market fears that the IMF programme could be delayed further over the government’s recently announced fuel subsidy package.

Prime Minister Shehbaz Sharif announced the government’s plans for fuel pricinglast week, a programme that some economists fear could hinder a crucial IMF pay out needed to prevent economic collapse.

Resident IMF representative Esther Perez Ruiz said this week that the government did not consult the fund about the fuel pricing scheme.

She said the fund would ask the government for more details about the proposal, including how it will be implemented and what protection would be put in place to prevent abuse.

Tawfik added that the market would trade in the negative until clarity on the IMF front is achieved.

Meanwhile, apart from ongoing uncertainty pertaining to the IMF bailout, ongoing political uncertainty is also denting investor confidence, Tawfik told Business Recorder.

“The market is also expecting a further policy rate hike of around 100-200 bps in the upcoming Monetary Policy Committee (MPC) meeting.”

Last month, the MPC of the State Bank of Pakistan (SBP) raised the key interest rate by 300 basis points, taking it to 20% — the highest level since October 1996 – in a move to control runaway inflation.

Sectors dragging the benchmark KSE 100 index lower included, oil and gas exploration (61.68 points), technology and communication (61.41 points) and miscellaneous (47.92 points).

Volume on the all-share index plunged to 46.7 million from 148.5 million on Wednesday. The value of shares traded fell to Rs1.3 billion from Rs3.9 billion recorded in the previous session.

WorldCall Telecom was the volume leader with 4 million shares followed by Telecard Limited with 3.9 million shares and TPL Properties with 1.8 million shares.

Shares of 290 companies were traded on Friday, of which 77 registered an increase, 194 recorded a fall and 19 remained unchanged.