The Pakistan Stock Exchange (PSX) staged a late recovery on Friday, closing nearly flat despite early losses driven by budget concerns. Investors remained wary of potential fiscal tightening as the government prepares its upcoming budget under IMF guidance.
Volatile Trading Session
The KSE-100 Index opened under pressure and dropped over 400 points in early trade. It hit an intraday low of 118,742.59 as uncertainty dominated investor sentiment. However, by closing time, the index had trimmed most of its losses to settle at 119,102.67, down just 50.37 points or 0.04%.
Cautious Buying Emerges
Selective buying in blue-chip stocks helped lift the index from its lows. Bargain-hunters stepped in, taking advantage of discounted prices after Thursday’s steep drop. Still, the overall market mood remained cautious, with most investors holding off major decisions.
Read: IMF Defends Pakistan Bailout, Rejects India’s Concerns
Tax Fears Cloud Sentiment
Market participants are bracing for tough fiscal measures in the FY2025-26 budget. Anticipated changes include higher capital gains taxes, subsidy cuts, and the removal of sector-specific exemptions. These adjustments are expected as part of Pakistan’s commitment under the IMF’s Extended Fund Facility (EFF).
IMF Tranche Offers Some Relief
Despite the volatility, Pakistan recently received a $1.023 billion tranche from the IMF, boosting its foreign exchange reserves. However, this support has not yet eased investor concerns about the upcoming tax reforms or how the government will manage spending.
Outlook Remains Uncertain
Thursday’s 778-point loss and Friday’s initial plunge show the nervousness surrounding budget developments. Although partial recovery suggests some investor confidence, the broader market is still in a wait-and-see phase. Traders expect continued sideways movement until the budget is announced and key economic policies are clarified.
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