On Monday, the Pakistan Stock Exchange (PSX) experienced a significant decline, with shares dropping over 250 points amid the International Monetary Fund (IMF) visit.
The benchmark KSE-100 index remained stagnant shortly after the opening bell until 10:30. It then took a downward turn, losing 416.91 points, or 0.55%, to settle at 74,925.43 from the previous 75,342.34 by noon. The index eventually closed at 75,084, marking a decline of 258.34 points, or 0.34%, from the previous close.
Yousuf M. Farooq, Director of Research at Chase Securities, attributed the market downturn to media reports suggesting potential electricity price hikes and additional taxation measures.
However, Farooq noted that after a substantial rally, some market consolidation is expected. “All attention is now on the forthcoming monetary policy, the budget, and the terms and adjustments for the next IMF programme,” he added.
Awais Ashraf, Director of Research at Akseer Research, linked the bearish momentum to investor concerns over the ongoing negotiations between the government and the IMF regarding a new programme.
Ashraf also highlighted investor apprehension regarding the geopolitical situation following the death of Iranian President Ebrahim Raisi. Earlier today, Iranian officials and state media reported that Raisi—a hardliner considered a potential successor to Supreme Leader Ayatollah Ali Khamenei—was killed in a helicopter crash in mountainous terrain near the Azerbaijan border. The crash on Sunday also claimed the life of Foreign Minister Hossein Amirabdollahian, with the helicopter reportedly completely burned.
Discussing IMF conditions, Ashraf pointed out, “Key concerns include the IMF’s demands for significant tax revenue increases, spending cuts, market-based exchange rate determination, and a tight monetary policy.”
Shahab Farooq, Director of Research at Next Capital Limited, echoed similar sentiments. He noted that the market was experiencing some profit-taking after gaining more than 2,700 points over the past seven sessions.
Additionally, Farooq mentioned apprehensions related to the Pakistan-IMF talks for a “larger and longer programme,” which could result in an upcoming budget with “inflationary taxation measures,” impacting the “outlook of commencing interest rate cuts.”