Paring its early gains, the Karachi stock exchange’s 100-share index fell sharply by 316 points to close at 21,698.35 points even as State Bank of Pakistan reduced its lending rates to give a boost the economy.
Dealers said trade volumes remained flat at 302 million shares compared with Wednesday’s tally of 306 million shares.
The value of shares traded during the day was Rs 9.54 billion.
Ovais Ahsan of JS Global Capital said the market dipped after trading in the positive territory for most of the day as a sell-off in regional markets spooked investors.
“With the growing realisation that Pakistan is entering a new IMF programme and that there is no confirmation of a Saudi deferred oil payment programme, investors fear stricter conditions and that an uptick in interest rates is on the cards,” he said.
Meanwhile, State Bank of Pakistan cut key policy rate by 50 basis points to 9 per cent in a bid to revive a sluggish economy.
“State Bank of Pakistan has decided to place a higher weight to declining inflation and low private sector credit relative to risks to the balance of payments position,” the bank said in a statement.
Hike in electricity prices and a higher general sales tax rate introduced by the new government elected in April could push inflation higher again, the bank said.
With the economy not in a very good state the foreign reserves of Pakistan have also dwindled to USD 6.2 billion on June 14, and the country is facing a punishing schedule of repayments to the IMF, putting pressure on the rupee and raising concerns of a full-scale payments crisis.
An IMF team is visiting Pakistan, and the government may soon be obliged to request a further bailout loan. Pakistan’s economy grew 3.6 per cent in the last fiscal year, below a target of 4.3 per cent.
Pakistan is faced with chronic gas and electricity shortages, a spiralling crime rate and violence in its biggest city Karachi that have hampered growth and contributed to falling foreign investment.
Sources by: business-standard