Pakistan Stock Exchange's (PSX) benchmark KSE-100 index shed 796.48 points to close at 44,948.52 on Tuesday as the uncertainty surrounding the recently announced agreement with the International Monetary Fund (IMF) dampened investor sentiments.
The market opened on a positive note to reach an intraday high of 45,915.61, a rise of 170.61 points, within the first hour of the session, only to follow it up with a bearish trend for the rest of the day.
The index fell to an intraday low of 44,881.15, a slump of 863.85 points, after 3pm and then gained slightly to close 796 points in the red.
Today's slump was a continuation of the last two sessions on Saturday and Monday, which is being attributed to the uncertainty surrounding dealings with the IMF, a further anticipated increase in the interest rate by the State Bank of Pakistan and mounting inflationary pressures.
A day ago, the IMF announced that it had reached staff-level agreement with Pakistan on policies and reforms needed to complete the sixth review under the $6 billion Extended Fund Facility that had been stalled since April.
The agreement, however, is subject to approval by the Fund's Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms, the IMF had said.
According to Khurram Schehzad — chief executive officer of Alpha Beta Core, an investment firm and strategy advisory platform — while a staff-level agreement has been finalised with the IMF, uncertainty still surrounds the matter.
"We are still unsure about when the Executive Board would approve the agreement," he pointed out.
Schehzad further said the State Bank of Pakistan (SBP) was due to announce its new monetary policy on December 14 and an anticipated increase in the interest rate had also dampened investor sentiments.
"Investors are, therefore, refraining from investing in the [stock] markets and preferring to sell shares," he explained.
The SBP had raised its benchmark interest rate by 150 basis points to 8.75 per cent as it announced a new monetary policy last week.
Dawn had reported at the time that many analysts had been expecting the central bank to lift the rates, but the size of the hike was beyond most expectations.