The Pakistan Stock Exchange (PSX) experienced a significant decline on Monday, with the benchmark KSE-100 index dropping 258.34 points, triggered by the recent visit from the International Monetary Fund (IMF).
Starting the trading session on a sideways note, the index took a downward turn, ultimately falling by 416.91 points, or 0.55 percent, to close at 74,925.43 by noon, down from the previous close of 75,342.34.
Market analysts have pointed to concerns over potential hikes in electricity prices and new taxation measures as primary reasons for the bearish momentum.
The stock market had previously seen a substantial rally, making some degree of consolidation expected by financial experts.
The focus among traders and investors is now shifting towards the upcoming monetary policy, the national budget, and adjustments that may arise from the next IMF program. These elements are critical as they could dictate market directions in the near term.
Concerns were also magnified by geopolitical tensions following the reported death of Iranian President Ebrahim Raisi in a helicopter crash near the Azerbaijan border, adding to the cautious sentiment on the trading floor.
Market participants are particularly anxious about the IMF’s expectations, which reportedly include substantial increases in tax revenue, reductions in government spending, a move towards a market-based exchange rate, and maintaining a tight monetary policy.
Moreover, the market is reacting to profit-taking actions after a significant rise in the previous sessions, with the KSE-100 gaining over 2,700 points.
With ongoing discussions about a more extensive and prolonged program with the IMF, there are apprehensions that the upcoming budget might introduce inflationary taxation measures, potentially affecting interest rate trends and overall market sentiment.
