Pakistan(National Times)- Bearish sentiment persisted in the stock market with Tuesday\u2019s session ending on a slight decline as profit-taking and ongoing concerns about rising circular debt in the energy sector weighed on investor sentiment. Concerns over circular debt in the gas sector and the government\u2019s rising debt levels added to the cautious tone. The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closed at 116,052.68, marking a loss of 202.44 points, or -0.17%, from the previous session\u2019s close of 116,255.12. The market hit an intraday high of 116,843.41, before tumbling to a low of 113,677.50, driven by heavy selling pressure. \u201cProfit-taking driven by redemptions at some major mutual funds,”\u00a0said Muhammad Saad Ali, Director of Research at Intermarket Securities Ltd. “Pressure in energy names driven by news of diversion of RLNG to residential consumers, which could lead to a fresh buildup in circular debt,\u201d he added. The diversion of re-gasified liquefied natural gas (RLNG) to the domestic sector surged to 450mmcfd in January 2025, compared to 250mmcfd in December 2024, under Sui Northern Gas Pipelines Limited\u2019s jurisdiction. This increase is expected to exacerbate the circular debt in the gas sector. The current average domestic tariff is Rs1,250 per MMBTU, while the RLNG tariff stands at Rs3,600 per MMBTU. This Rs2,350 per MMBTU differential will directly contribute to the growing circular debt, raising concerns about the financial strain on gas utilities. Finance Minister Muhammad Aurangzeb, speaking at a Senate Standing Committee meeting on Monday, projected a strong current account surplus for FY25 while ruling out any desperate measures that could jeopardize economic stability. \u201cThree years ago, the government pressed the growth accelerator, straining the balance of payments,\u201d Aurangzeb said. \u201cBut no matter how much pressure there is now, we will not repeat that mistake.\u201d The minister dismissed liquidity concerns, clarifying that there had been no complaints about letters of credit (LCs) being opened in the last 10 months. \u201cNo foreign company has been stopped from sending profits abroad, which shows there\u2019s no pressure on the currency,\u201d he noted. Highlighting foreign interest in Pakistan\u2019s economy, Aurangzeb mentioned significant investment commitments from major global players, including Saudi Aramco, Chinese firm Norinco, and electric auto giant BYD. The State Bank of Pakistan (SBP) reported on Monday that the government\u2019s total debt increased by Rs1.452 trillion, or 2.1%, in the first five months of FY25, reaching Rs70.366 trillion as of November 2024. This rise is attributed to government spending exceeding revenue collection and external debt repayment requirements. As of June 30, 2024, the total debt stood at Rs68.914 trillion. The debt rose 1.8% month-on-month and 11% year-on-year (YoY) by the end of November. Domestic debt grew by 3% during July to November FY25, reaching Rs48.585 trillion, marking an 18% YoY increase. Meanwhile, external debt rose marginally by 0.11% to Rs21.78 trillion in the same period, though it declined 2.91% YoY and 0.5% month-on-month. The government\u2019s rising debt levels, combined with pressures in the energy sector, have raised concerns about fiscal sustainability. These issues come as Pakistan prepares for a critical review under the International Monetary Fund\u2019s (IMF) Extended Fund Facility (EFF) to unlock the next tranche of $1 billion in March. The IMF\u2019s proposed levy on gas supplies to industrial captive power plants (CPPs) remains a critical structural benchmark under the EFF. In addition, Pakistan is set to receive $20 billion from the World Bank over the next decade as part of its Country Partnership Framework 2025-35.\u00a0 This funding, pending approval on January 14, will align with the government\u2019s National Economic Transformation Plan, targeting GDP growth, poverty reduction, and infrastructure improvement. Inflation trends showed some respite, with short-term inflation, as measured by the Sensitive Price Indicator (SPI), recording a marginal weekly decline of 0.26% for the week ending January 2, 2025. However, year-on-year inflation remained elevated at 3.97%. Textile exports, a key contributor to the economy, rose by 10% year-on-year in the first half of FY25, reaching $9.9 billion. This reflects resilience in one of Pakistan\u2019s critical sectors despite external challenges. On Monday, the PSX witnessed a significant decline, with the KSE-100 Index closing at 116,255.12, down 1,331.86 points, or -1.13%, from the previous session\u2019s close of 117,586.98.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
Pakistan(National Times)- Bearish sentiment persisted in the stock market with Tuesday\u2019s session ending on a slight decline as profit-taking and ongoing concerns about rising circular debt in the energy sector weighed on investor sentiment. Concerns over circular debt in the gas sector and the government\u2019s rising debt levels added to the cautious tone. The Pakistan […]<\/p>\n","protected":false},"author":2,"featured_media":96513,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-96512","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment","entry"],"yoast_head":"\n