- Lack of clarity on political front, delays and uncertainty on formation of new govt along with reports around circular debt management plan drive negative sentiment
The wider market shrugged off a post on Sunday evening by the Petroleum Division, Ministry of Energy with index-heavy OGDC and PPL deep in the red, dragging the KSE-100 with selling pressure also due to political uncertainty after the General Elections.
On Monday, the KSE-100, under pressure over the ‘surprise’ results in the elections that took too long too compile and also invited criticism over their transparency, was down nearly 2,300 points after a fall of 1,200 on Friday – the day after the election.
At close, the KSE-100 settled at 61,065.31, down 1,878.43 points or 2.98%. This is the lowest closing of the benchmark index since December 27, 2023.
The energy ministry’s post that “there have been productive deliberations with the International Monetary Fund (IMF) after which additional information has been shared” and “further progress on these plans is expected in the coming week” was taken as a sign of a further delay in the circular debt reduction and tariff rationalisation plans.
Reports also suggested that the IMF had not given its consent to the plans, putting a dampener on share prices of OGDC and PPL that had shot up over speculation in the previous few sessions. The selling pressure also extended to the wider energy and power sectors.
At the same time, lack of clarity over the future course of the power corridors took a toll on the benchmark index as political parties scrambled to gather support in the face of independent candidates registering a heavy win.
Experts said the negativity comes as the market seeks clarity on the political front.
“We believe the market requires clarity on government formation, key portfolios of finance, energy and industries ministries, challenged constituency results, and clarity on circular debt plan for stability and investor confidence,” said brokerage house Arif Habib Limited (AHL) in a note.
“We anticipate the market might experience some pressure amid political ambiguity particularly in E&P sector, due to the delay in the circular debt resolution plan,” it added.
During the previous week, the bourse witnessed a mixed trend as the investors remained cautious and avoided taking fresh positions over the delay in general election results and lack of clarity on the formation of a new government.
The benchmark KSE-100 index decreased by 59.17 points on a week-on-week basis and closed at 62,943.75 points.
Meanwhile, the rupee registered a marginal decline of 0.02% against the US dollar in the inter-bank market on Monday. At close, the local unit settled at 279.33 after a loss of Re0.05 against the greenback, as per the State Bank of Pakistan.
Volume on the all-share index increased to 350 million from 258 million a session before.
The value of shares rose to Rs12.7 billion from Rs12.5 billion in the previous session.
K-Electric Ltd was the volume leader with 50.3 million shares, followed by WorldCall Telecom with 34.6 million shares, and Oil & Gas Dev. with 15 million shares.
Shares of 354 companies were traded on Monday, of which 35 registered an increase, 300 recorded a fall, while 19 remained unchanged.