The Pakistan Stock Exchange (PSX) lost more than 600 points on Monday as investors reacted to the delay in the federal budget announcement. The benchmark KSE-100 index fell by 886 points early in the day and was still down by over 640 points by mid-afternoon. Market experts say the delay, along with uncertainty over the International Monetary Fund (IMF) conditions, caused investors to reduce their stock holdings.
Mohammed Sohail, CEO of Topline Securities, explained that the postponed budget and unclear IMF terms pushed investors to be cautious. Additionally, Yousuf M. Farooq from Chase Securities mentioned the oil sector came under pressure due to disagreements with the IMF on solving the circular debt issue. He also said the market should improve once the budget details become clearer.
The government postponed the budget release from June 2 to June 10 after incomplete talks with the IMF about taxes and spending. The IMF staff held multiple discussions with Finance Minister Muhammad Aurangzeb to try to resolve issues. Meanwhile, companies and investors worry about delays in circular debt payments and possible changes in tariffs.
On a positive note, Awais Ashraf from AKD Securities highlighted that the government lowered its primary surplus target to 1.6% of GDP from 2.1% last year. This reduction may give the government some room to avoid heavy new taxes. He expects the upcoming budget to focus more on people’s needs and continue tax reforms begun under the IMF program.
Last week, the stock market had gained over 12,000 points thanks to a US-brokered ceasefire between two nuclear-armed neighbors. However, this week’s trading slowed down as investors chose to wait before the 2025-26 budget announcement. The market’s cautious mood shows how sensitive investors are to economic news and policy changes.