Volatility is reigning supreme on the stock market and is still in the dock as the uncertainty regarding the IMF-talks has increased due to continued delay in bailout.

According to available reports, the share market remained volatile on Wednesday as the trading commenced on a low note and then remained ranged bound, moving to and fro within a small range as share traders are extremely cautious and following a ‘wait and see’ policy regarding the outcome of Pak-IMF talks. The ongoing political and economic worries are also adding fuel to the fire due to which the dull activity continues.

The PSX mainboard Volumes showed  a forty cent fall  for July-Feb on a year on year basis.

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. Share traders and 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.

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 catastrophic. 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.

According to the 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 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.

As a matter of fact, the drop in value of the shares has sent the overall sentiments into despair as it points to economic recessions of big volume. 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.

January recorded 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.

The same situation prevails and 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.

One can only 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.

In a nutshell, tTe Pakistan Stock Exchange is at its lowest ebb, and in case, the IMF bailout is not secured, it will get another shock  to its  benchmark KSE-100 index.

It has been in red zone for the last many months due to the ongoing uncertainty regarding the deal with IMF and its harsh conditionalities, the gas price hikes, outflow of foreign investments, the woes of industrial sector, which is already reeling in pain to the economic uncertainty and political instability in the country which have caused the shareholders of the stock market to panic and 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.

Published in The Daily National Courier, March, 24 2023

Like Business on Facebook, follow @DailyNCourier on Twitter to stay informed and join in the conversation.