The Pakistan Stock Exchange (PSX) witnessed a turbulent trading session on Thursday, marked by early gains and a subsequent downturn, as investor sentiment took a hit following the International Monetary Fund’s (IMF) renewed call for strict fiscal discipline. The benchmark KSE-100 index, which briefly crossed the psychological threshold of 122,000 points, ultimately closed the session lower, snapping its recent upward streak.
The market faced volatility on the last trading day before the extended Eid-ul-Azha holidays. Investor caution intensified after the IMF urged the government to ensure rigorous implementation of the agricultural tax and raised concerns about proposed plans to sell surplus electricity at discounted rates. The Fund also flagged the issue of provincial energy subsidies, emphasizing the need for a coherent strategy to curb tax evasion and financial leakages across sectors.
These statements were perceived by market participants as early warnings ahead of the federal budget for FY2025–26, which is due to be unveiled on June 11. Concerns are mounting that the budget could include stringent revenue measures in line with IMF conditions, including higher taxation on financial income and fuel-related levies.
According to Ahsan Mehanti, Director at Arif Habib Corporation, multiple factors contributed to the bearish close, including anticipated hikes in taxes on banking and savings schemes, increased petroleum levies, rupee volatility, and dismal export performance for May. Pakistan’s exports contracted by 10% year-on-year last month, adding to the pressure on the external sector and dampening investor confidence.
Topline Securities reported that the index moved within a wide band, with an intraday high of 483 points and a low of 281 points. By market close, the KSE-100 settled at 121,641, shedding 157.87 points or 0.13% compared to the previous session.
Despite the market’s soft close, several key stocks made positive contributions. Engro Holdings, Packages Ltd, Services Industries, Colgate-Palmolive, and K-Electric collectively added 403 points to the index. On the flip side, heavyweights like Meezan Bank, Systems Ltd, Fauji Fertiliser, Bank Al-Habib, and Lucky Cement dragged the index down by 320 points.
Ali Najib, Deputy Head of Trading at AHL, noted that much of the pressure stemmed from pre-holiday profit-taking as investors locked in recent gains ahead of the four-day Eid break. With trading set to resume on Tuesday—coinciding with the federal budget announcement—market participants opted for a cautious stance.
Trading activity remained buoyant despite the market dip. Volume on the PSX rose by 22.26% to 854.61 million shares, highlighting continued interest among traders. However, the total traded value fell 26.75% day-on-day to Rs25.79 billion, indicating more selective buying and reduced turnover in high-value stocks.
As the nation awaits the upcoming budget and clarity on IMF-related reforms, market direction will likely hinge on the balance between fiscal discipline and economic growth incentives. Until then, volatility may persist as investors navigate policy uncertainty and macroeconomic headwinds.