Bearish sentiment continued on the trade floor at the Pakistan Stock Exchange on Thursday with shares plunging more than 1,000 points, a day after India announced a slew of diplomatic measures targeting Pakistan following a deadly attack in occupied Kashmir that resulted in the deaths of over two dozen tourists.
The benchmark KSE-100 index declined by 1,086.51, or 0.93 per cent, to stand at 116,139.63 from the previous close at 11:13am.
Yousuf M. Farooq, director research at Chase Securities, said, “The market opened lower amid fears of escalating tensions between Pakistan and India.”
“However, positive corporate earnings have supported a partial recovery,” he noted.
“Going forward, investor sentiment will hinge on the trajectory of India-Pakistan relations, upcoming corporate results, and the monetary policy decision expected in early May.”
On macroeconomic indicators, he highlighted that inflation was at a record low — with the the monthly current account at a record surplus, and the real effective exchange rate (REER) stood “at a stable 101”.
Yesterday, the index fell below the 118,000 barriers on renewed concerns about Pakistan’s economic outlook and rising geopolitical tensions caused a wave of panic selling by cautious investors.
Yesterday, the International Monetary Fund (IMF) lowered Pakistan’s economic growth forecast to 2.6pc, raising concerns over its economic outlook.
In January, the IMF had lowered the country’s growth estimate to 3pc for the current fiscal year, down from 3.2pc it had projected previously.
In its latest update, the IMF slashed the growth estimate to 2.6pc for the current fiscal year and 3.6 for the next fiscal year. It also put the inflation estimate at 5.1pc and 7.7pc for the current and next fiscal years.
The increase in trade tariffs on Pakistani products could have a devastating impact on Pakistan’s important exports and serves as a wake-up call for diversification, according to a state-owned think tank.
Analysts had also attributed the reversal in sentiment to escalating regional geopolitical tensions, which prompted investors to adopt a cautious stance and lock in recent gains.
In a major escalation, India suspended the Indus Waters Treaty (IWT) with Pakistan with immediate effect in the wake of an attack in occupied Kashmir’s Pahalgam a day ago. Pakistan, in response, has convened a meeting of the National Security Committee to deliberate the resulting situation.
The attack took place in Pahalgam — a tourist hotspot in the scenic Muslim-majority territory that draws thousands of visitors every summer — and at least 26 people were killed, all men, while police said another 17 people were injured, when gunmen opened fire on visitors in the popular destination.
In addition, Fitch’s forecast, highlighting concern that the rupee may slide to Rs285 against the US dollar by June and likely fall further to Rs295 by the next fiscal year’s end, also kept bulls at bay as investors opted to have a cautious approach.
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