Pakistan Stock Exchange plunges 4% on political jitters

KARACHI: Pakistan’s benchmark KSE-100 index fell 4.11% on Tuesday, its biggest one-day drop in more than a year, as political uncertainty and profit-taking weighed on investor sentiment.

The index, which tracks the performance of the top 100 companies listed on the Pakistan Stock Exchange (PSX), closed at 59,170.97 points, down 2,534.12 points from the previous close of 61,705.09 points.

The market was dragged down by heavy selling in blue-chip sectors such as cement, oil and gas, banking and power, as investors booked profits after the index had rallied to a record high of 67,093.96 points on Dec 14.

“Political uncertainties are rattling investor confidence and, should this instability persist, it may trigger further corrective movements in the market,” Faran Rizvi, head of equity sales at JS Global, told Dawn.

Rizvi said the index’s key support level was at 58,500 points and recommended a “buy on dip” approach, particularly focusing on value stocks.

Volatility at the bourse: stock market turns negative again

A buy on dip is a strategy where investors buy stocks during a short-term price dip, anticipating price recovery in the near future.

Some analysts said the market was undergoing a “much needed” corrective phase after the index had made rapid gains in the past few days, driven by strong corporate earnings, improved macroeconomic indicators and foreign inflows.

They also attributed the downward spiral to a “high leveraged position” and a change in market trends as the year came to an end.

“The leveraged positions continue to unwind, similar to last week,” said Raza Jafri, head of equities at Intermarket Securities.

However, he added on a positive note that the market “should be in a more stable position from January onwards”, as the economic outlook remained positive and the corporate earnings season was expected to be robust.