KARACHI: The Pakistan Stock Exchange on Monday plunged by over 800 points as the economy faces a myriad of serious economic challenges.
The benchmark KSE 100 index declined by 846.93 points, a decrease of 2.11 percent, to close at 39,296.70 points. The total volume of scripts declined to 129.840 million at a total value of Rs5.973 billion. The KSE 30 index decreased at 363.86 (1.97%) to close at 18,090.65 points. The total volume of scripts was 73.948 million.
The downward trajectory comes as an IMF delegation is set to resume talks with the government to evaluate Pakistan’s performance of the bailout package. There are reports that the Federal Board of Revenue (FBR) is resisting the IMF’s demand for a mini-budget. The tax authority is also demanding a cut in the Rs5.5 trillion tax revenue targets which is considered unrealistic. The financial institution is not inclined to give any further relaxation.
Muhammad Farhan, Senior Equity Sales at M.M. Securities, said the increase in Consumer Price Index (CPI) has reached the highest level which is higher than market expectations. The inflation rate has risen to 14.56 percent while the food inflation was 23.6 percent in January.
He said the stock market has been declining since the past week. The market closed on Friday declined by 580 points on the final day of the week over the absence of any positive economic or political triggers. The talks of a mini-budget and tax regime are increasing pressure on the stock market.
Pakistan is also required to take additional revenue measures to meet the tax target. The tax target remains elusive and the government has been borrowing from bank to meet the targets. The only alternative is to implement a tax regime and increase the GST rate.
The Economic Coordination Committee (ECC) is holding a meeting today to review the economic situation and is expected to approve a subsidy package. Finance advisor Hafeez Shaikh will chair the meeting to decide over issuing Rs200 billion Ramazan package. The meeting will also discuss sugar imports while the summary regarding the approval of gas prices will also be discussed.
The market was also dampened by rumours that Hafeez Shaikh and State Bank of Pakistan (SBP) Governor Reza Baqir were being replaced. The rumours surfaced that Prime Minister Imran Khan has vowed to take action against those responsible for the recent flour and sugar crises and the increase in prices.
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