Bears maintained their grip at the Pakistan Stock Exchange as the index saw a further decline of 1,406 points or 3.9% during the week to settle at 34,717 points. With the beginning of Ramazan this week, the stock market witnessed dull interest, which led the volumes to slump.
Talks between the government and the International Monetary Fund (IMF) are in the final round and an announcement regarding a bailout package is expected soon. This uncertainty also played a significant role in keeping investors wary, who resorted to book profits and remain on the sidelines. The bearish run was seen despite share prices falling to attractive valuations.
The week kicked off on a negative note, continuing the losing streak from the preceding session. This was also aggravated by changes at a high level in the government’s economic team. However, the market managed to end the five-day negative run and finished with a meager gain of 26 points.
Unfortunately, the momentum could not be sustained and the index fell for the three following session, plunging below the 34,800-mark. Apart from the mystery around the IMF talks, the poor macroeconomic indicators also dented sentiments. There was no respite from the selling pressure as the index retreated on the last trading day of the week. Matters also worsened due to economic uncertainty after the National Accounts Committee anticipated a sharp slowdown in economic growth to 3.3% in FY19 – the slowest pace in the past nine years.
Concerns of further interest rate hikes, depreciation of the PKR and fiscal consolidation measures (revision in energy prices, withdrawal of subsidies/tax concessions, etc) also kept the investment sentiment negative. Further, among key events, the market is also looking ahead for semi-annual index review scheduled on May 13, 2019, where participants are concerned on the potential downgrade of Pakistan to frontier market.