PSX sees mixed performance amid IMF negotiations

The Pakistan Stock Exchange (PSX) experienced a volatile trading session on Thursday, with the benchmark KSE-100 index gaining more than 200 points during intraday trade before closing slightly below the 75,000 mark. This movement comes amid ongoing negotiations between Pakistan and the International Monetary Fund (IMF) for a new bailout package.

Market performance

According to data from the PSX, the KSE-100 index rose by 231.85 points, reaching a level of 75,188.52, marking a 0.31 per cent increase from the previous close of 74,956.67. However, this gain was not sustained throughout the day.

During the trading hours, the index hovered around the significant 75,000 level but experienced a notable downturn in the last hour of trading. This decline resulted in the index closing at 74,997 points, down by 250 points from the previous day’s closing.

Market analysis

Topline Securities described the session as a “muddled day,” attributing the market’s erratic behaviour to a lack of positive triggers that could support a continued upward trend. The brokerage noted that the market’s indecisiveness was influenced by ongoing IMF negotiations and the anticipation of further austerity measures in the upcoming budget.

“Investors opted for profit-taking above the 75,000 level due to uncertainties surrounding the IMF talks and the forthcoming fiscal policies,” Topline Securities stated in its report.

IMF negotiations

Pakistan is under pressure to finalise a formal staff-level agreement with the IMF within the next 40 days. The agreement hinges on the implementation of several prior actions, primarily requiring parliamentary approvals and legislative measures. These actions are critical for securing the next tranche of the IMF bailout package.

The IMF mission, led by Nathan Porter, has concluded discussions with Pakistani authorities on essential economic reforms. These reforms span across critical sectors, including power and gas, state-owned enterprises, pensions, revenue mobilisation, and monetary policy.

Upcoming fiscal year budget

Pakistan’s financial year runs from July to June, with the fiscal year 2025 budget needing to be presented before June 30. This will be the first budget by Prime Minister Shehbaz Sharif’s new government, and it is expected to incorporate significant austerity measures as part of the IMF agreement.

Despite the conclusion of discussions, the IMF mission will leave on Friday without announcing a staff-level agreement, adding to the market’s uncertainty. The lack of immediate resolution has contributed to investor caution, leading to the mixed performance observed at the PSX.

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