Political uncertainty, foreign outflows cause PSX to open week in red

KARACHI: The Pakistan Stock Exchange (PSX) began the week on a downward trend, with the benchmark index shedding over 200 points as political instability and foreign outflows weighed heavily on investor sentiment.

Although the market started the session on a positive note, with the KSE-100 index touching an intra-day high of 86,105 points, the optimism quickly faded. Profit-taking across various sectors led to a gradual decline, with the index eventually slipping below the 86,000 points mark.

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Analysts attributed the bearish sentiment to concerns over government policies regarding tariff issues for independent power producers (IPPs), apprehensions about the impact of International Monetary Fund (IMF)-mandated reforms – particularly on tax incentives for the agriculture and textile sectors, and delays in the privatisation of several state-owned enterprises (SOEs).

The benchmark KSE-100 index reached an intra-day low of 85,156.11 points, marginally recovering before closing at 85,261.38 points, down by 222 points, or 0.26 per cent.

Political noise and foreign capital flight also played a part in dampening the market’s momentum. Sector-specific issues, such as expectations of reduced earnings in the energy sector and weaker-than-anticipated quarterly results from fertiliser companies, led to selling pressure as well.

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Energy and financial sectors collectively led to loss of over 500 points from the index. This was partially offset by the gains in the fertiliser and refinery sectors.

The day’s trading volumes also saw a decline, with 477.6 million shares exchanged, down from the 560.7 million shares traded in the previous session. Foreign investors remained net sellers, offloading shares worth Rs 1.02 billion.