Pakistan Stock Exchange (PSX) is likely to have a roller-coaster ride owing to domestic political developments, as the former ruling party, Pakistan Tehreek-e-Insaf (PTI), has decided to resign en masse from the assemblies.
In a tweet, Fawad, who served as an information minister in Imran Khan’s cabinet, said, “The PTI has decided to resign from assemblies. This process [of resignations] will start from the National Assembly tomorrow after the election of the prime minister.”
The benchmark KSE-100 Index of the bourse shed 707.53 points (-1.57 percent) despite Friday’s gain as a mixture of political turmoil, dismal economic data and rupee devaluation struck the trading environment and dampened investor sentiments.
The KSE-100 started the week with a loss of 1,250.06 points as dissolution of the National Assembly took its toll on market sentiment. With the absence of a functional cabinet, Pakistan’s economic policy seemed like it was moving forward without a driver. The rupee fell to record lows during the week, while foreign exchange reserves were reported to have hit an almost two-year low.
The trend reversed on Tuesday and the market managed to tick up 200 points in a two-day bull run largely owing to cherry picking by market participants. Scrip prices fell to attractive valuations on the back of bear run in early part of the week and investors resorted to value hunting which propped the market.
A dip in international crude oil prices pointed towards partial easing of inflationary pressures and drove uptrend at the bourse. Thursday saw the rupee sink to an all time low of Rs188.17 against the greenback and buoyed by the development, the stock market plummeted once again, shedding over 300 points.
However, the central bank’s decision to raise the policy rate by 250 basis points, and Supreme Court’s order to set aside the deputy speaker’s ruling, and restore the National Assembly brought some respite. According to experts, the market is expected to continue its momentum given no other sudden development takes place in the political arena.
The market staged a rebound after the Supreme Court of Pakistan deemed the National Assembly deputy speaker’s ruling unconstitutional and reinstated the National Assembly. Moreover, sharp recovery in the local currency against the US dollar, of Rs3.5, drove optimism at the Pakistan’s equity market.—TLTP
