The Pakistan Stock Exchange which is already at its lowest ebb, got another shock on Tuesday when the KSE-100 index plunged 566 points with the benchmark KSE-100 index.

Though the PSX is in red zone for the last many weeks due to the ongoing uncertainty regarding the deal with IMF and its harsh conditionalities, but the gas price hikes are the latest to hit PSX on Tuesday at investors are of the view that due to gas tariff hike, the prospects of profit earning for the industries are low as it will add to cost of doing businesses.

As Pakistan is trying to secure the IMF bailout, the Govt has to swallow the bitter pill of meeting the monetary funds’ hard condtions, which have resulted in 34 per cent increase in gas prices for the industrial sector, which is already reeling in pain to the economic uncertainty and political instability in the country,

The prevailing economic situation has confused the investors and industrialists and a number of units have started their operations. On the other hand, the shareholders of the stock market have started quitting the trading in haste in the wake of share market’s collapse and its unstable outlook with no imminent turned around in its fortunes unless the IMF deals  is  secured.

Though last year was also a bad year for the PSX, but the current year has sent it into total abyss for the time being. Last month, stock market crashed by a massive 1,379 points on Jan 18, which the lowest in the last two and half years.

Increasing terrorists attack across the country, political instability and economic crisis have perturbed the investors, who have sold massive shares in haste as panic prevailed on the market.

Till now, the market has seen various drops during which the market has lost almost Rs200 billion in matters of days. Last month, the market capitalisation (value of all listed companies) lowered to Rs6.134 trillion in a single day and the drop continued for consecutive days and is still going on.

Investors have fixed their eyes on the stalled IMF programme as IMF bailout is the only way out of the current crisis which has engulfed the Pak economy in the post-floods situation.

The steep fall of the PSX is continued since last year and economic experts have already termed the outgoing year as one of worst years for the stock market as the benchmark of share prices were down by a formidable 9.4 per cent from 2021.

For the last one and half year, the market is under pressure most of the time but after recent Letter of Credit crisis, it seems to be going nose-dive as investors see the situation as extremely bad.

Last year recorded a 22pc depreciation in the value of the Pak rupee against the US dollar due to which the dollar-based return of the KSE-100 index were recorded at 29pc.

The current situation regarding our foreign exchange reserves which are at their lowest of less than US dollar three billion, which are barley enough for three weeks import cover, have created a panic-like situation in the investment sector.

The panic is going to persist until the IMF bailout is secured. Currently, the investors are pulling their money from investments and focused on gold-purchasing which they see as safe haven in current economic turmoil resulting in a total or partial closure of a number of industries due to unavailability of raw material due the Letter of Credit crisis.

Though the IMF team is the country and the talks between the Govt and IFM are going on, but the first-round talks have ended in failure, which has caused further frenzy among the investors, who are in a fix and will remain so till the revival of the IMF loan programme without which the situation cannot improve.

Right now, the investors are scared of investing as the rupee’s fall is still continued which means the capital is being flowing out of the country in a big way.

Last month i.e., January was the most volatile one for the  markets as it recorded several lows during the whole month and it is still declining and is range-bound.

It gains some points one day, but loses almost double of the same the very next day.

So, you can say that the market is in a somber mood as it is still in the red zone due to sluggish activities on part of the investors.

Right now, we see the negative sentiments prevailing in the wake of the increasing value of US dollar against Pak rupee which is eroding the shareholders confidence and keeping them at bay from share businesses.

The only way out of the current negativity at the stocks is the outcome of the IMF-govt talks. If the talks were successful and IMF bailout was secured, then the market can be back to activities with positive direction.

That’s why the business community and the investors are having a close eye on the Pak-IMF deal which is yet to be finalized.

The IMF team left here last week without reaching an accord with Pak Govt and before departure told the  GOvt to take measures to correct various sectors but the main is the energy sector and circular debt issues, which were on top of the agenda during the Govt-IMF talk in Islamabad last week.

That why the Govt has not only incarased gas tariff for the household but the price of gas for the power sector has been hiked from Rs857 per MMBTU to Rs1,050 per MMBTU which is around 22.8%. Fo

As far as the export industry is concerned,  it has also got the shock after a 34% hike in gas tariff, the rate has been increased  to Rs1,100 per MMBTU.

It may also be mentioned here that a massive Rs170 billion in taxes are in pipeline on part of the government  due to which the masses are bracing for tough times ahead as for imposing these taxes, a mini budget will be introduced as the Finance Minister has already said in media talk.

Published in The Daily National Courier, February, 16 2023

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