On Tuesday, shares at the Pakistan Stock Exchange (PSX) experienced a significant drop, with the benchmark KSE-100 index shedding over 600 points in intraday trade. By 12:22 PM, the index had fallen 622.46 points, or 0.76 per cent, landing at 81,214.45 from its previous close of 81,850.50 points.
Raza Jafri, CEO of EFG Hermes Pakistan, attributed the decline to missed earnings expectations by state-owned oil exploration companies, sparking negative sentiment in the market. He added that independent power producers (IPPs) were also facing downward pressure amid news that the government was considering renegotiating their contracts, a move aimed at addressing “unsustainable” electricity tariffs.
Earlier this month, the government confirmed its plans to engage IPPs in contract renegotiations to lower electricity prices, although Power Minister Awais Leghari cautioned that substantial relief in tariffs might not be immediate. Despite this, Leghari promised “good news” regarding negotiations in the near future.
Awais Ashraf, Director of Research at AKD Securities, stated that the potential termination or renegotiation of IPP contracts had intensified bearish trends in the market. He further noted that a Senate committee’s call to investigate possible manipulation of U.S. dollar rates by commercial banks regarding letters of credit (LCs) had contributed to market pressure.
Analysts also pointed to broader uncertainty surrounding the government’s stance on IPP capacity payments and the political climate, which remains tense following the Supreme Court’s recent verdict supporting the PTI’s claim to reserved parliamentary seats.
Despite the bearish mood, analysts recommended investors focus on high-dividend-paying stocks and firms positioned to benefit from structural reforms, encouraging a cautious yet strategic approach in the current market environment.