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PSX jumps over 850 points in intra-day trading as govt jacks up petrol price

27 May, 2022
<p>At the time of filing, the benchmark index was being traded at 43,416.35 points, a gain of 874.64 points or 2.06%. AFP/File</p>

At the time of filing, the benchmark index was being traded at 43,416.35 points, a gain of 874.64 points or 2.06%. AFP/File

The government’s decision to hike up petroleum product rates indicating a revival of the International Monetary Fund (IMF) programme improved sentiments at the Pakistan Stock Exchange (PSX) as the benchmark index jumped up over 850 points during intra-day trading on Friday.

At the time of filing, the benchmark index was being traded at 43,416.35 points, a gain of 874.64 points or 2.06%. On Thursday, the KSE-100 had closed up 529.05 points, or 1.26%, to finish at 42,541.71.

The improvement comes after Finance Minister Miftah Ismail in a press conference on Thursday night announced an increase in petroleum products’ prices by Rs30 per litre with implementation from midnight.

He expressed hope that reaching an understanding on staff-level agreement with the IMF would now be easier as constructive discussions are being held with the Fund.

The minister acknowledged that the price hikes would contribute to inflation to some extent but said the government had no other choice.

He added that the decision was taken to reduce pressure on the rupee, improve the stock market, and most importantly bring balance in the economy.

Analysts were of the view that the latest development is an indication of the IMF programme revival and that the government has charted out an economic roadmap. “This will bring much-needed clarity to the market, which is being reflected both in equities and in currencies,” Tahir Abbas, Head of Research at Arif Habib Limited, told Business Recorder.

Abbas said positivity would remain in the market, but warned that inflation would spike. “The situation will be tough for the next 3-4 months, however,the measure was needed, otherwise the country could have defaulted, which would have been much worse,” he said.

This is an intra-day update.

The story was originally published in Business Recorder on May 27, 2022.