Shares at PSX plummet nearly 600 points

Shares at the Pakistan Stock Exchange (PSX) fell sharply on Monday afternoon, with the benchmark KSE-100 index dropping 590.08 points, or 1.46 per cent, to reach 39,860.45 points at 3:19pm.

Two analysts attributed the stock market's fall to the blast at a mosque in Peshawar's Police Lines area, in which 28 people died and more than 150 were injured. Aba Ali Habib Securities' Salman Naqvi said the index started falling shortly after news of the blast.

He also cited other factors, including the rupee's depreciation and the hike in petrol prices which would increase inflation in the coming months and lead to further hikes in the interest rate.

Topline Securities Senior Manager Equity Mohammad Arbash also agreed with Naqvi's view, saying expectations of higher inflation in the coming months, as well as, political sentiments were weakening investor sentiments.

Meanwhile, Intermarket Securities Head of Equity Raza Jafri said the index was giving up some of last week's gains as it was uncertain whether Pakistan's late push to revive the stalled IMF programme would be enough.

Even if the loan programme was revived, concerns about the country's balance of payments position would persist in the second half of the current fiscal year once the IMF programme ended in June.

"A lot more comfort on economic outlook is needed for a sustainable rally at the bounce," he commented.

Last week, the government removed an unofficial cap on the USD-PKR exchange rate, after which the local currency plunged to a record low. Separately, it also announced a Rs35 jump in petrol prices.

The moves are aimed at reviving the stalled IMF loan programme. A delegation of the international money lender is scheduled to arrive in Pakistan tomorrow to discuss the completion of the ninth review, which would release $1.2 billion and unlock inflows from friendly countries.

Pakistan needs to complete the review to stave off the risk of default as its foreign exchange reserves depleted to $3.7bn, not enough to cover even three weeks of imports.

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