The Pakistan Stock Exchange (PSX) faced a significant downturn on Tuesday as mounting concerns over the upcoming federal budget and uncertainties surrounding ongoing IMF negotiations triggered a wave of selling pressure across key sectors. The benchmark KSE-100 Index dropped by 718.51 points, or 0.6%, settling at 118,971.12 by the end of the trading session.
Investor sentiment remained subdued throughout the day, reflecting cautious positioning in the face of anticipated fiscal measures that could impact various industries. Heavy selling was observed in automobile assemblers, commercial banks, oil and gas exploration companies, and oil marketing companies (OMCs). Prominent index-heavyweights such as MCB Bank, United Bank Limited (UBL), Pakistan State Oil (PSO), Sui Northern Gas Pipelines Limited (SNGPL), Mari Petroleum (MARI), Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), and Pakistan Oilfields Limited (POL) ended the day in negative territory.
Ismail Iqbal Securities, in its daily market commentary, noted that investor caution is tied to budget-related speculation and a lack of fresh triggers. “The benchmark index ended the day in the red, as investors treaded cautiously ahead of the upcoming budget announcement. With most developments already factored in, market sentiment remained subdued, awaiting fresh cues that could shift the momentum,” the report stated.
The bearish performance on Tuesday followed a flat trading session on Monday, where the KSE-100 Index managed to post a minor gain. The index touched an intraday high of 120,285.55 before closing at 119,689.63, marking a marginal increase of 40 points or 0.03%. Market participants are now widely anticipating new policy directions, tax revisions, and fiscal consolidation steps as part of the federal budget, which could have far-reaching implications for businesses and investors.
The downtrend in Pakistan’s equity market mirrored a broader trend in global financial markets, where uncertainty surrounding fiscal sustainability in the United States and the absence of meaningful trade developments continued to weigh on sentiment.
Internationally, Asian stock markets showed mixed performance on Tuesday. US Treasury yields eased after spiking on Monday due to last week’s credit outlook downgrade by Moody’s, which cited the United States’ growing debt burden—now approaching $36 trillion—as a pressing concern. The yield on the 30-year US Treasury bond was down by 3.5 basis points, at 4.906%, after briefly touching an 18-month high of 5.037% in the previous session.
Major US equity indices managed to recover from earlier losses and closed mostly flat. Meanwhile, the MSCI Asia-Pacific index (excluding Japan) rose by 0.36%, staying close to a seven-month high achieved last week. Japan’s Nikkei Index also posted a gain of 0.65% during early trading.
In China, markets opened steady after the central bank announced a cut in benchmark lending rates for the first time since October. This monetary policy move was accompanied by coordinated deposit rate reductions by five of the country’s largest state-owned banks, signaling a broader effort to support economic activity.
With budget season in Pakistan drawing closer and IMF talks ongoing, market participants are expected to remain cautious in the coming days. All eyes will be on fiscal signals and macroeconomic indicators that may guide the PSX’s direction as the financial year approaches its close.