Bearish momentum dominated the Pakistan Stock Exchange (PSX) on Monday as shares declined by more than 250 points following the International Monetary Fund (IMF) visit.
Shortly after the opening bell, the benchmark KSE-100 index continued to trade sideways until 10:30, the KSE-100 then continued a downward trajectory, shedding 416.91 points, 0.55 per cent, to stand at 74,925.43 from the previous 75,342.34 at 12pm. Finally, the index closed at 75,084, down by 258.34 points, or 0.34pc, from the previous close.
Yousuf M. Farooq, director of research at Chase Securities, said: “The market is down on media reports of a possible electricity price hike along with additional taxation measures.”
However, according to Farooq, “The market has also seen a very large rally and some consolidation is normal.
“All eyes are now on the next monetary policy, the budget and terms and adjustments for the next IMF programme,” he added.
Awais Ashraf, director of research at Akseer Research, attributed the bearish momentum to investors being worried “about the outcome of ongoing negotiations between the government and the IMF team regarding the new programme”.
He also said that investors were worried about the geopolitical atmosphere after the death of the Iranian President Ebrahim Raisi.
Earlier today, it was reported by the Iranian officials and state media that Raisi — a hardliner long seen as a potential successor to Supreme Leader Ayatollah Ali Khamenei — was killed in a helicopter crash in mountainous terrain near the Azerbaijan border.
An Iranian official said that the helicopter carrying Raisi and Foreign Minister Hossein Amirabdollahian was completely burned in the crash on Sunday.
Regarding the IMF conditions, Ashraf highlighted: “Key concerns include the IMF’s demands for significant tax revenue increases, spending cuts, market-based exchange rate determination, and a tight monetary policy.”
Shahab Farooq, director of research at Next Capital Limited, echoed the same sentiments. He said, “The market is witnessing some profit-taking today after gaining more than 2,700 points during the past seven sessions.”
Additionally, he said that there were concerns related to the Pakistan-IMF talks for a “larger and longer programme”, which may result the upcoming budget to have “inflationary taxation measures”, impacting “the outlook of commencement of interest rate cut”.
