The prevailing economic situation has confused the investors in stock market shares and they quit 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 okay for Pakistan.

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 recent Bloomberg data terms the KSE-100 index as one of the  worst-performing stocks in terms of US dollar.

The news circulating on the social media regarding the risk of default on international payments amid our foreign exchange reserves which are at their lowest of around US dollar three billion, which rae barley enough for three weeks import cover, have created a panic-like situation in the stock market.

The panic is going to persist until the IMF bailout is secured. Currently, the investors are pulling their money from stocks 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.

The drop in value of the shares has sent the overall sentinemnts into despair as it points to economic recessions of big volume.

Right now, the investors are scared of investing in stock shares despite the low prices of shares 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 share 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 talks which are in progress in Islamabad for the ninth review and its success is required for bringing back bulls to the stocks.

On the other hand, the increasing incidents of terrorism are also taking toll on the stock market shares business as lawlessness has always been detrimental to the business environment.

The volatility of the share market will continue till the outcome of the Govt-IMF talks and till now the investors are pursuing a ‘wait and see’ policy.

Published in The Daily National Courier, February, 10 2023

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