Geopolitical tensions, policy uncertainty, pre-holiday caution weigh on investor confidence
KARACHI:
In a typically subdued pre-Eid trading environment, the KSE-100 index witnessed a sharply negative session, reflecting cautious investor participation and thin trading volumes. The benchmark index experienced significant volatility during the day, swinging between an intraday high of 153,943.70 and a low of 148,747.72.
Persistent selling pressure throughout the session eventually dragged the market lower, with the index closing at 149,178.66, registering a decline of 4,687.51 points or 3.05%
Sentiment was further dampened by escalating geopolitical tensions in the Middle East – particularly concerns over possible disruptions to oil shipments through the Strait of Hormuz. On the domestic front, uncertainty surrounding a potential fuel price adjustment and the upcoming review of Pakistan’s programme with the International Monetary Fund (IMF) also kept investors wary.
Read: PSX dips 3,630 points on oil surge, Gulf war
While talking to The Express Tribune, analysts attributed the prevailing dullness largely to seasonal pre-holiday caution, as many participants chose to stay on the sidelines ahead of Eid.
JS Global Head of Research Waqas Ghani said that the KSE-100 index remained under pressure as macroeconomic uncertainty amid heightened geopolitical tensions weighed on investor sentiment. The prevailing risk-off environment has prompted investors to adopt a cautious stance, leading to increased volatility and selling pressure. “While uncertainty persists in the short term, stability in the macroeconomic environment could help restore investor confidence going forward,” he said.
In a similar view, KTrade Securities Equity Trader Ahmed Sheraz stated that the PSX KSE-100 index opened on a negative note today, declining 284 points from the previous close, and subsequently faced selling pressure amid thin volumes, reflecting the typical pre-Eid lull in market activity.
Read More: PSX ends lower on caution ahead of weekend
Investor sentiment remained fragile due to escalating geopolitical tensions and concerns regarding a potential disruption of the Strait of Hormuz, while uncertainty over a possible domestic fuel price hike and the pending IMF review have also weighed on confidence.
Meanwhile, global oil prices have extended gains as regional tensions threatened key export facilities, raising concerns for Pakistan’s fragile economic recovery through a higher import bill. The government has absorbed an estimated Rs23 billion fiscal impact to keep domestic fuel prices unchanged while also securing alternative fuel supplies from Gulf countries to mitigate potential disruptions, he added.
Last week, the benchmark KSE-100 Index closed at 153,866 points, declining by 3,629 points (-2.3% WoW), with subdued volumes keeping the market largely range-bound as investors maintained a cautious stance amid slightly negative global cues from US and Asian equities, Sheraz added.
Sentiment has also remained under pressure with oil hovering above the $100 per barrel level, heightening concerns for import-dependent economies like Pakistan due to potential strain on the external account and inflation outlook, Sheraz noted.
