Profit-Taking Triggers Dip in Pakistan Stock Exchange After Initial Gains

Following an initial surge, the Pakistan Stock Exchange (PSX) experienced profit-taking, leading to a decline of over 160 points in the benchmark KSE-100 Index on Monday.

Trading began positively, with the index reaching an intraday peak of 120,285.54.

As of 1:55 PM, the KSE-100 Index stood at 119,431.85, reflecting a decrease of 217.29 points, or 0.18%.

Market analysts suggest that participants are exercising caution due to concerns about the International Monetary Fund’s (IMF) 11 stipulations linked to Pakistan’s forthcoming federal budget.

The IMF, in its recent assessment, has adjusted Pakistan’s GDP growth forecast downward to 2.6% for the current fiscal year 2024-25. This revision, down from the prior 3.2% projection in October, is attributed to sluggish activity in the first half of the year and broader global economic uncertainties.

The PSX previously saw a substantial recovery in the past week, achieving its largest week-on-week (WoW) gain in five years. This rally was sparked by the announcement of a ceasefire between Pakistan and India, which boosted market confidence.

The KSE-100 Index jumped by 12,474 points, or 11.6% week-on-week (WoW), closing at 119,649 points, a significant rise from the previous week’s 107,174.64 points.

Globally, Asian markets experienced a downturn on Monday. Mixed economic data from China revealed struggles in its domestic economy, even as US tariffs began to impact exports. Meanwhile, the White House maintained pressure on trade partners.

US stock futures and the dollar weakened, while Treasury yields increased amid concerns about inconsistent US economic policies, highlighted by Moody’s downgrade of the country’s credit rating.

Growing apprehension surrounds the United States’ $36 trillion debt, especially as Republicans aim to pass a comprehensive tax cut package that could potentially add $3 trillion to $5 trillion in new debt over the next decade.

US Treasury Secretary Scott Bessent addressed the downgrade in television interviews on Sunday, while also warning trade partners that they would face maximum tariffs if they did not engage in “good faith” negotiations.

Bessent is scheduled to attend a G7 meeting this week for further discussions, and US Vice President JD Vance met with European Commission President Ursula von der Leyen on Sunday to discuss trade matters.

The tariff disputes have negatively affected consumer sentiment, and analysts will closely monitor earnings reports from Home Depot and Target this week for insights into spending trends.

In the markets, MSCI’s broadest index of Asia-Pacific shares excluding Japan declined by 0.2%, with Japan’s Nikkei falling by 0.6%.

Chinese blue chips decreased by 0.4% as retail sales figures for April fell short of expectations, while industrial output slowed but not as significantly as anticipated.

This information is an intraday market update.