The uncertainty on economic front fuelled by reports of tough International Monetary Fund (IMF) conditions for the bail-out package Pakistan is seeking to fix its external accounts woes has led Pakistan Stock Exchange (PSX) to close lower on Tuesday.
The market opened flat on Tuesday and after half an hour bullish trend revisited the bourse. The benchmark KSE 100 index of the PSX jumped to 37326 points on the back of over 550 points gains.
The midday bull run was fulled by the Finance Minister’s expected visit to the bourse at the weekend to meet the unnerved investors and consider incentives. But in the second session, the market’s northward journey reversed.
In the last session, the market plunged into the red zone and at one point during trading, it shed over 250 points.
However, it recovered some of the losses and closed 104 points down at 36636. During the trading, a total of 92,124,890 shares changed hands.
Commenting on trading, senior analyst and Chief Executive Officer (CEO) of Arif Habib Corp Ahsan Mehnati said that stocks closed lower on investors’ concerns over economic uncertainty.
He added that the bear in the market was driven by uncertainty over IMF conditions for the bailout package, likely raise in power tariff, an expected increase in interest rates, and further rupee depreciation.
He added that the expected visit of the Finance Minister later this weekend to consider proposals of incentives and tax cuts invited session buying. Uncertainty over corporate earnings outlook at PSX played a catalyst role in bearish close, he added.
On Monday the PSX closed 750.36 points down (2pc) at 36,767.57. Stocks continued to bleed as investors were on a selling spree to cut losses, on concerns over the economy.
While the foreign investors have sold equity worth $356 million year-to-date, local participants have been able to absorb much of the foreign sell-off.
One of the major fear that has come to haunt investors is the probability of Pakistan being eased out of the MSCI emerging market index in the semi-annual review in November. `It is quite possible that the removal may turn out to be a blessing since international active funds could swoop to buy those stocks at current attractive levels, reasoned several analysts.