Shares at PSX lose over 700 points

Shares at the Pakistan Stock Exchange (PSX) lost over 700 points on Monday, with analysts attributing the sell-off to political uncertainty.

According to the PSX website, the benchmark KSE-100 index closed at 47,447.95 points, down 770.54 points or 1.6 per cent from the previous close of 48,218.49 points.

Intermarket Securities’ Head of Equity Raza Jafri said that despite improvement in the last few months, the economy was still vulnerable.

“July’s large current account deficit is raising concerns of further interest rate hikes especially as inflation is still high,” he told Dawn.com, adding that a lack of clarity on circular debt settlement was also affecting investor sentiment.

Last week, the State Bank of Pakistan reported that the current account deficit (CAD) reduced by 36 per cent to $809 million in July FY24 compared to $1.261 billion in the same month of the previous fiscal year.

July’s current acc­ount was in deficit for the first time after four months of surpluses. June saw a surplus of $504m.

Salman Naqvi, head of research at Aba Ali Habib Securities, attributed today’s losses to political uncertainty and the deteriorating law and order situation in the country.

Moreover, he said, the Oil and Gas Development Company (OGDC) had last week informed investors that the company hadn’t received any formal communication from authorities on the settlement of the circular debt.

“This doesn’t mean that this [circular debt settlement] is not in the pipeline… it is, but there is definitely an uncertainty surrounding the matter,” he added.

Naqvi further told Dawn.com that the market was on a “correction course” and predicted that this would continue for the next few days.

Dalal Securities CEO Siddique Dalal also highlighted political uncertainty and the current account deficit as one of the reasons for the weakening rupee.

“These and other factors have shrunk the market confidence. For the time being, there is a dent in the market until some good news comes,” Dalal added.