- The stalling of the IMF’s 9th review is weighing on investor sentiment.
- Unstable economic conditions are the top concern.
- Analysts say stocks are likely to remain under pressure.
Stocks fell sharply on Monday as the deadlock deepened over the ninth review of the International Monetary Fund’s (IMF) program linked to the release of the next tranche, which is aimed at Pakistan, which is struggling with a shortage of foreign exchange reserves. is important.
The benchmark KSE-100 shares index of the Pakistan Stock Exchange (PSX) fell 537.43 points (1.28%) to close at 41,612 points after hitting an intraday low of 635 points.
After a slightly positive start, the market succumbed to massive profit-taking, Topline Securities said in its daily market report.
“The sell-off jitters can be attributed to investor jitters over the hold-up in the IMF’s ninth review and the subsequent approval of a $1.2 billion loan tranche,” the brokerage said.
The report said that these concerns are weighing on investor confidence due to volatile economic conditions and rising foreign exchange reserves.
System Ltd, Lucky Cement, Engro Corporation, Millat Tractors, and Charat Cement Company Ltd came under heavy pressure as they collectively lost 194 points in the index.
Arif Habib Limited said in its market report that the Khun Ki Holi session was recorded at PSX.
“The market opened in the green, but the index went into the red due to lack of investor participation and redemptions,” the brokerage said.
Arif Habib analysts said volumes on the main board dried up particularly as a result of the political upheaval in the country and third-tier companies continued to lead the volume board.
JS Research said fears of a further delay in the conclusion of the IMF’s ninth review and a slowdown in cement shipments kept the selling pressure.
“Going forward, the index may continue to trade under pressure, however, long-term investors may accumulate select stocks that have strong fundamentals with high dividend yield,” suggested JS analysts.
Among the major losers were cement (-127.1 points), technology and communication (-9 points), commercial banks (-76.2 points), fertilizers (-50.6 points), exploration and production (-42.4 points).
Volume fell 11.8% to 126.3 million, down from 143.2 million shares. Average trade value also fell 36.4 percent to $14.5 million, compared to $22.8 million.
Stocks that contributed significantly to volume were World Call Telecom, Fuji Cement Company Limited, Haskol Petroleum, K Electric, and DS Industries Limited.
Topline Securities, in a report on current economic challenges, said that Pakistan’s economy is going through the most difficult period in its 75-year history.
“Large external financing gaps, challenges to global financial markets, catastrophic floods and local political instability have increased the risk of timely repayment of external debt,” it said.
“Declining foreign exchange reserves and widening external funding gap are worrisome.”
The report added that although the current account deficit was narrowing following currency devaluation and other austerity measures, the biggest concern was external debt servicing.