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The Pakistan Stock Exchange (PSX) experienced a sharp decline on Thursday, as bearish sentiment took hold, with shares plummeting by nearly 2,000 points. The KSE-100 index fell by 1,365.18 points, or 1.21%, reaching 111,049.62 points by mid-day, down from 112,414.80 points at the previous close.
The decline continued into the afternoon, with the index further slipping to 110,521.28 points at 2:05 PM, marking a total loss of 1,893.52 points. At the end of the trading session, the benchmark index recorded a value of 110,423.32 points, reflecting a decrease of 1,991.48 points, or 1.77%, compared to the previous close.
Yousuf M. Farooq, Director of Research at Chase Securities, pointed to rising security concerns as a key factor in the downturn, which he linked to worsening relations with Afghanistan. Recent reports of a Pakistani airstrike on terrorist camps in the neighboring country have captured the attention of investors, raising concerns and adding to the prevailing negative sentiment in the market.
“Despite this, market trailing earnings yields remain above the long-term average, indicating the potential for above-average long-term returns for investors,” he added on a positive note.
“In the short term, the market’s direction is being influenced by political noise following a significant rally over the past year,” he stated.
Meanwhile, Mohammed Sohail, chief executive of Topline Securities, credited the bearish momentum to “rising leverage and ending December contract” impacting the market. “Moreover, ongoing security situation at the borders affecting sentiments,” he said.
Awais Ashraf, director research at AKD Securities, credited the momentum to the “realignment of portfolios at the year-end and last week of rollovers of future contracts”.
“Concerns regarding unification of gas prices exerting pressure on most weighted stock while there is a concern of overvaluation on some stocks,” he highlighted, adding that he believed “falling interest rates and lower returns of alternative investments would keep the equities in limelight”.
“We advise investors to build positions in E&P, Fertiliser, Cement, OMCs, Autos, Textile and Technology as we expect these sectors to be the beneficiary of monetary easing, structural reforms and declining commodity prices,” he recommended.
In a dramatic turn of events, the market witnessed yet another setback yesterday, as the bears once again overpowered the bulls. This latest downturn followed two consecutive recovery sessions and resulted in a staggering loss of Rs690 billion for investors in just one day.
Furthermore, the recent trend was linked to a depreciating currency, declining international oil prices, and significant selling by institutions in overvalued stocks, which intensified negative movements at the PSX.
