Record inflation takes toll on PSX; index plunges 1,221 points
Statesman Report
KARACHI: The Pakistan Stock Exchange began the week on a bearish note on Monday, with the KSE-100 index sliding by 1221.55 points (3.02 per cent) as the market reacted to the record-breaking inflation reading amidst a global stocks slump.
The index was at 41,630.93 points at the market’s opening, which remained the day’s high, before dropping 1,398 points to an intra-day low of 40,233.64. At the day’s close, the index settled in the red at 40,409.38 points, down 3.02pc.
Ali Asghar Poonawala, Deputy Head of Research at AKD Securities, said the market was broadly reflecting macroeconomic weakness due to a much higher-than-expected Consumer Price Index (CPI) reading, which came in at 14.6pc for January against an expectation of 13.6pc.
Poonawala said the fiscal side was also looking very difficult to manage, adding that the policy changes which were brought about were not translating into revenue collection. “The IMF programme review is ongoing and what you tend to see in this … if you aren’t meeting the criteria then they can impose more criteria,” he said. Poonawala predicted that monetary loosening will be delayed and on the fiscal side the government now needs a mini-budget.
Head of Foreign Institutional Sales at Next Capital Limited Muhammad Faizan also said the reason for yesterday’s slide was the high inflation reading. He added that international markets also saw a downfall which was being reflected in the stock market, primarily backed by fears from the spread of the coronavirus.
Bearish trend continues
The previous week had proven to be troublesome for the equities market as the KSE-100 index recorded a steep drop of 1,002 points (2.4pc) and settled below the 42,000-level at 41,631.
The decline in global equities over the fear of Chinese coronavirus spilled into the local market as well where investors decided to hold on to cash. The decrease in international crude prices at the beginning of the year kept the index-heavy exploration and production stocks under pressure.