Panic gripped the Pakistan Stock Exchange (PSX) on Monday as the benchmark KSE-100 index fell below the 43,000 point level, amid concerns of ballooning external deficit stemming from the government’s decision to keep oil prices unchanged.
The government on Sunday ruled out an immediate increase in the prices of petroleum products as the market forecast a hike in rates of up to Rs86 per litre in the event that fuel and energy subsidies are curtailed.
While the government continues with the subsidies, investor sentiment took a hit as expectation of increase in external deficit triggered panic.
The session kicked off with a steep slide and weak investor interest made the KSE-100 nosedive over 1,000 points in initial minutes. At this point, value hunting from market participants helped it recover marginally.
However, political uncertainty and concerns over suspension of the International Monetary Fund (IMF) programme triggered a selling spree in the final hour, pushing the market to its lowest closing level since March 2021.
At close on Monday, the KSE-100 ended with a loss of 819.14 points, down 1.88%, to finish at 42,667.32.
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Speaking to Business Recorder, BMA Capital Executive Director Saad Hashemy said that the equity market nosedived on the back of status quo in oil prices, which raised concerns of the external deficit widening to unsustainable levels.
“In addition, the ongoing political and economic uncertainty aided the dip. Plus, there is widespread panic in the market over lack of developments on the IMF front,” he said.
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The market analyst stressed that the equity market had turned attractive because stock prices had dived to low valuations and double digit dividends were being disbursed by companies.
In a report, Capital Stake said indices at the PSX "dipped lower and lower all day long while volumes appreciated from last close. As per analysts, the government’s delay over the growing economic crisis caused panic amongst investors who resorted to selling.”
Over the weekend, the government decided to keep petrol prices unchanged at Rs149.86 for the fortnight.
The government will bear the price differential of Rs47.02 per litre. Breakup of petrol prices showed that their base price increased by Rs17.42 to Rs184.37. Retailer and freight cost remained constant at Rs12.51 while taxation remained zero.
On the economic front, the rupee sustained its downward trend and devalued by Rs1.65 on Monday to close at record low level of Rs194.18 against the greenback.
Sectors driving the benchmark KSE-100 index downward included banking (175.31 points), cement (127.24 points) and technology and communication (111.24 points)
Volume on the all-share index rose to 250.45 million from 208.11 million on Friday. The value of shares traded surged to Rs8.91 billion from Rs6.97 billion recorded in the previous session.
Lotte Chemical was the volume leader with 18.14 million shares, followed by Pak Refinery with 18.07 million shares, and Cnergyico PK with 14.17 million shares.
Shares of 340 companies were traded on Monday, of which 63 registered an increase, 263 recorded a fall, and 14 remained unchanged.