Selling pressure gripped the Pakistan Stock Exchange (PSX) on Wednesday, with the benchmark KSE-100 Index shedding over 3,700 points during a volatile session.
The index, which had briefly climbed to a record 116,236.70 points in intra-day trading, was hovering at 111,070.29 points by the closing bell, marking a significant decline of almost 3790 points or 3.3%.
Earlier, at 12:55, the KSE-100 was trading at 112,674.53 points, marking a decline of 2,186.15 points or 1.90%
The trading session began on a positive note. However, the momentum reversed as broad-based selling emerged across key sectors, including automobile assemblers, cement, commercial banks, oil and gas exploration, power generation, and refineries.
With the banks’ ADR now under control and the policy rate down by 2%, the market has resumed its normal activity, including correcting itself for the purchases done in anticipation of the rate cut.
A successful migration of institutions to equity funds drove the stock market up pre-16th December, which now leads to profit-taking by some of the smaller participants.
Heavyweight stocks such as HUBCO, PRL, NRL, MARI, OGDC, PPL, ENGRO, HBL, MCB, MEBL, and UBL were among those trading in red, contributing significantly to the downward pressure on the index.
The selling frenzy follows Tuesday’s volatile session, where the KSE-100 Index closed 1,300 points lower, settling at 114,860.68. Despite the positive impact of declining interest rates on equities, investor sentiment appeared cautious amid profit-taking and concerns over market volatility.
The dip in market performance comes despite encouraging economic indicators, including a $729 million current account surplus recorded in November 2024, according to data released by the State Bank of Pakistan (SBP) on Tuesday. This figure represents a stark improvement compared to a $148 million deficit in November 2023 and marks the fourth consecutive month of a current account surplus.
The improvement in the external account, bolstered by higher remittances and a better trade balance, has been viewed as a positive development for Pakistan’s macroeconomic outlook. Analysts had anticipated these economic indicators, coupled with declining interest rates, to sustain bullish sentiment in the equity market.
While the recent surge in the index to its highest-ever level reflects investor confidence in Pakistan’s improving economic fundamentals, the sharp sell-off indicates profit-taking and concerns over short-term market stability. Analysts believe that the correction may offer buying opportunities, especially in sectors poised to benefit from declining interest rates and favourable external conditions.
