Shares at PSX lose over 900 points on political uncertainty, foreign selling

Bears continued to dominate the Pakistan Stock Exchange (PSX) on Tuesday and dragged its benchmark index down by over 900 points.

According to the PSX website, the KSE-100 index lost 931.98 points to stand at 61,841.74, down 1.48 per cent, from the previous close of 62,773.72 points.

The benchmark of representative shares opened the week a day earlier with a decline of more than 1,000 points, the biggest single-day fall in over a month. The losses were attributed to profit-taking ahead of the announcement of the monetary policy.

Today, energy stocks such as K-Electric Limited, World Telecom Limited, Hascol Petroleum Limited, Pakistan Telecommunication Company Limited and Pakistan Refinery Limited witnessed major activity.

Shahab Farooq, director of research at Next Capital Limited, attributed the bearish momentum to political uncertainty ahead of the February 8 general elections.

“Geopolitical concerns, along with foreign selling, restricted market performance,” he told Dawn.com, adding that the market was expected to remain volatile in the near term.

Yousuf M. Farooq, director of research at Chase Securities, echoed similar sentiments. He noted that the PSX remained under pressure due to foreign selling and election uncertainty.

He said that there was “some disappointment” due to the State Bank of Pakistan (SBP)’s outlook regarding inflationary pressure in the monetary policy statement yesterday. However, Farooq highlighted that inflation was expected to gradually decline over the coming months.

A day earlier, the central bank kept the interest rate unchanged at 22pc and increased the inflation target in the range of 23 to 25pc for the current fiscal year.

“Participants expect the SBP to reduce the policy rate in its next meeting in March. Political uncertainty will likely keep investors jittery in the stock market, and volatility could persist until there is clarity on the political front,” Farooq added.

Abdul Azeem, head of research at Spectrum Securities Limited, observed that the index “witnessed a significant contraction” and attributed the decline to political uncertainty and sustained foreign selling.

“The special court’s decision to impose a 10-year sentence on Imran Khan and Shah Mahmood Qureshi, coupled with foreigners selling $17.7 million worth of shares during the last two sessions, eroded investor confidence and led to heightened selling pressure in the market,” he said.

Azeem further noted that international oil prices had increased by $0.23 per barrel, reaching $77.02 “amid concerns over falling demand also had a negative impact on the market”.

Awais Ashraf, director of research at Akseer Research, also said that political uncertainty ahead of polls, MPC’s decision to maintain the status quo and foreign selling amid a “deteriorating law and order situation” caused the index to nosedive today.

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