The Pakistan Stock Exchange (PSX) opened the week under strong bearish pressure, with the benchmark KSE-100 index plunging by 1,207 points — a decline of 1.07% — during intraday trading on Monday. By the close of the session, the index settled at 111,986.88 points, marking a total loss of 1,264.78 points or 1.12% from the previous day’s closing value of 113,251.66.
According to Yousuf M. Farooq, Director Research at Chase Securities, trading activity was notably subdued on the first day of Ramazan, with only Rs18 billion worth of shares changing hands due to shortened trading hours — a seasonal trend during the holy month.
Farooq explained that investor sentiment remained cautious ahead of the upcoming performance review by the International Monetary Fund (IMF). In July 2024, Pakistan had secured a $7 billion Extended Fund Facility from the IMF to support economic stability and long-term growth. The programme spans 37 months and includes six periodic reviews, each of which determines the release of further funds. The next installment of around $1 billion hinges on the successful completion of the first review.
While analysts generally expect a smooth review process, lingering doubts remain over Pakistan’s ability to effectively widen its tax base. Farooq also pointed out that although the current account is relatively stable, the latest data shows some early signs of strain. Inflation, he warned, is likely to stay low in the immediate term but could accelerate again after April.
Despite the cautious outlook, Farooq maintained that the market still holds potential for long-term investors, especially if clarity around the IMF deal improves.
Sana Tawfik, Head of Research at Arif Habib Limited, linked Monday’s downturn to selling pressure, compounded by lower trading volumes due to Ramazan.
Insight Securities noted that February ended slightly in the red for the stock market, with the bearish trend persisting for the second consecutive month. Investor anxiety over potential tax reforms and uncertainty surrounding the upcoming IMF review contributed to the sell-off.
Throughout February, equity investors exercised caution, opting to cash out gains where possible. Analysts believe a successful review could unlock the much-needed second tranche of the IMF loan, which is essential for meeting Pakistan’s external debt obligations.
Meanwhile, the State Bank of Pakistan reported a modest $21 million increase in foreign exchange reserves, bringing the total to $11.2 billion. The rupee, however, weakened marginally by 0.04%, closing at Rs279.57 against the US dollar.
