Amidst mounting concerns over Pakistan’s economic outlook, the bears have firmly taken control of the Pakistan Stock Exchange (PSX) today, sending shockwaves through the market. The benchmark KSE-100 index nosedived by a staggering 702 points, representing a significant 0.93 per cent decline, as it stood at 74,872.48 at 1:38 PM.
Experts and market analysts have pointed to various factors contributing to this dramatic downturn. Raza Jafri, the chief executive of EFG Hermes Pakistan, highlighted investors’ cautious approach, attributing it to the impending federal budget announcement, which holds the potential to reshape monetary policy decisions.
Moreover, Mohammed Sohail, the chief executive of Topline Securities, emphasised the delay in the budget announcement as a key factor exacerbating the bearish sentiment. The uncertainty surrounding fiscal policies seems to have triggered a wave of selling pressure among market participants.
Adding to the mix of concerns is the looming specter of increased external financing needs over the coming months, as noted by Awais Ashraf, director of research at Akseer Research. This has sparked worries about the stability of the exchange rate and the possibility of monetary easing by the State Bank of Pakistan (SBP), further dampening investor confidence.
The market downturn has had a broad-reaching impact across various sectors, with banks, fertiliser, exploration, production, and technology firms bearing the brunt of the selling pressure, as highlighted by Ashraf.
Shahab Farooq, director of research at Next Capital Limited, underscored the role of political uncertainties in exacerbating the market turmoil, despite the unexpected dip in inflation recorded for May 2024.