The Pakistan Stock Exchange (PSX) witnessed a sharp decline on Monday, as the benchmark KSE-100 Index dropped by 881.55 points, or 0.74%, settling at 118,221.12. The bearish sentiment was largely driven by investor anxiety surrounding the upcoming federal budget for the fiscal year 2025-26, with fears of additional tax measures unsettling the market.
The trading session opened on a weak note, reflecting the cautious outlook that has persisted over the past week. By midday, the index had fallen by as much as 929 points, reaching an intraday low of 118,173.4. The downtrend was fueled by broad-based selling across key sectors, with limited signs of recovery during the day.
Heavyweight stocks were among the hardest hit, including major names such as HUBCO, Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), Pakistan Oilfields Limited (POL), Mari Petroleum, Pakistan State Oil (PSO), and Sui Southern Gas Company (SSGC). The pressure on these key players contributed significantly to the broader market decline.
In addition to the energy sector, other industries also saw a notable downturn. Automobile assemblers, oil and gas exploration companies, oil marketing firms, and power generation stocks were all impacted by the negative sentiment. Market participants appeared to adopt a wait-and-see approach, anticipating potentially adverse fiscal measures in the forthcoming budget.
This sharp dip follows a similar trend observed last week when the KSE-100 index closed 546.47 points lower, down 0.45%, ending the week at 119,102.67. The continued decline suggests growing unease in the financial markets as budget day, scheduled for June 10, draws nearer.
Analysts have pointed to heightened fiscal uncertainty as the principal driver of the recent sell-off. There is widespread speculation that the government may introduce additional taxation measures or revise existing fiscal policies in a bid to meet International Monetary Fund (IMF) targets and improve revenue generation. These expectations have made investors cautious, prompting many to exit positions in key sectors that are likely to be impacted by any new taxation regime.
The PSX’s downward trajectory also reflects a broader lack of confidence in the near-term economic outlook. While Pakistan has made some headway in managing its fiscal challenges, including reaching a staff-level agreement with the IMF earlier this year, markets remain sensitive to policy shifts and macroeconomic indicators.
Investors and analysts alike will be closely monitoring the budget announcement for clarity on the government’s fiscal strategy. Until then, volatility is expected to persist, with sentiment largely dictated by evolving expectations around tax policy and public spending.
In the lead-up to the budget, market watchers will also be evaluating the government’s plans for key sectors including energy, manufacturing, and infrastructure development. How these sectors are addressed in the fiscal plan will likely determine the next direction for the equity markets.
As the countdown to the budget continues, the PSX remains vulnerable to speculation and uncertainty, underscoring the need for transparent and investor-friendly policy measures to restore confidence and stabilize the market.