The Pakistan Stock Exchange (PSX) began another week on a bearish note, with the benchmark index plunging over 750 points as the market reacted to developments on the economic and political front.
In the backdrop of a worsening economic scenario, coupled with rising coronavirus cases, the index fell below the 44,000-point mark on Monday. The economic instability following formation of an Economic Advisory Council (EAC) and change of finance minister ahead of budget impacted the investment climate.
In a surprise move, the prime minister on Saturday approved the reconstitution of the EAC but did not appoint former finance minister Shaukat Tarin as its convenor.
Moreover, inflation rate once again jumped above 9% in March, as reported by the Pakistan Bureau of Statistics on Thursday, coupled with a gloomy economic outlook aided the bearish sentiment.
The benchmark KSE-100 index opened in the green, however, the bourse could not hold on the higher level and gave way to selling pressure. Throughout the trading session, the index could not skip out of the red territory.
At close, the benchmark KSE-100 index recorded a decrease of 752.74 points, or 1.7%, to settle at 43,548.21 points.
“The slump can be attributed to the rising Covid-19 cases in Pakistan and other regional countries,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq told The Express Tribune.
Tariq added, “Changes in cabinet and uncertainty in refinery policy coupled with delay in payments to Independent Power Producers (IPPs) lent support to the decline.”
“However, we expect the trend to change after the Economic Coordination Committee (ECC) meeting which is scheduled to be held on Wednesday.”
Shedding light on the low volumes recorded on Monday, BMA Capital Executive Director Saad Hashemy pointed out that when the market declines with a drop in volumes it is not a good sign.
Investors are confused due to political unrest, change of finance minister and formation of EAC. Market players are looking for certainty before taking fresh positions.
The analyst added that there is not much time left in the financial budget, which is to be announced in June 2021, because of the government’s decision to change the finance minister the stock market is undergoing unrest.
Moreover, economic numbers including high inflation rate and preparation ahead of Ramazan also contributed in the negative close.
Overall trading volumes soared to 302.8 million shares compared with Friday’s tally of 266.8 million. The value of shares traded during the day was Rs13.4 billion.
Shares of 391 companies were traded. At the end of the day, 61 stocks closed higher, 322 declined and eight remained unchanged.
TRG Pakistan was the volume leader with 24.6 million shares, losing Rs8.74 to close at Rs127.48. It was followed by Dost Steels with 24.4 million shares, gaining Rs0.72 to close at Rs5.88 and Silk Bank with 20 million shares, gaining Rs0.11 to close at Rs1.26.