The Pakistan Stock Exchange (PSX) witnessed intense selling pressure on Tuesday as the benchmark KSE-100 index lost over 1,100 points in intraday trading.
According to the PSX website, the KSE-100 index opened at 41,367.11 points and went up 176 points initially.
However, after 10:30 am the bears took control and the market began sliding. At around 3:25 pm, the index hit 40,313.78 points — a decline of 1,053.33 points or 2.55 percent.
The market’s fall coincided with the rupee falling to an all-time low against the US dollar for a second consecutive day.
Head of research at Intermarket Securities Raza Jafri attributed the sharp decline at the PSX to “panic” transferring from the currency market to equities.
He opined that the market was worried sticking to the International Monetary Fund (IMF) programme may be prove to be “politically difficult”.
“Pakistan can’t afford this. It’s a tough situation with fear gripping investors,” he said.
Ahsan Mehanti of the Arif Habib Corporation shared a similar view. “The depreciation of the rupee is effecting the stock market,” he said.
“We have seen intense selling of the blue-chip stocks today, the effects of which are now visible,” Mehanti highlighted, stressing that pressure on the market would persist in the near future as well.
He explained that investors would now prefer safe investments in fixed incomes, which was the reason for the recent decrease in the average business volume of the market.
Political uncertainty and formation of the new government in Punjab was also affecting the investor sentiments, the analyst added.
The by-elections in the province saw the PTI register a thumping victory against the PML-N, which leads the ruling coalition. Following the win, the PTI has demanded early elections.
Meanwhile, Salman Naqvi, head of research at Aba Ali Habib Securities, blamed the market’s fall to Fitch’s downgrading and political uncertainty.