Tuesday saw increased selling pressure on the Pakistan Stock Exchange (PSX) as the benchmark index dropped more than 2,000 points during intraday trading.
The bourse remained flat for ten minutes following the opening bell, per the PSX website.
PSX KSE-100 Index Crashed by 2500 Points During Intraday Trade
The market started to slowly decline at 10:49 am, with the KSE-100 index falling by 1186.19 points from the previous closing of 65,204.67 to 64,018.48.
The index fell by 2,500 points by 2:40 pm, closing at a 3.96 percent loss from Monday’s close.
The key share benchmark dropped 925.35 points the day before as a result of profit-taking by investors.
Stocks in the banking, fertilizer, and exploration and production sectors all had negative contributions.
Experts Opinion
Head of JS Global’s equities sales Faran Rizvi blamed the negative trend to “heightened geopolitical tensions,” which have driven up oil prices around the world.
A day before, rising attacks on ships in the Red Sea by the rebel organization Houthi, based in Yemen and affiliated with Iran, caused a 3% increase in global oil prices.
Oil giant BP announced that it had momentarily stopped all waterborne transits.
“This poses a significant challenge for countries like Pakistan, which heavily rely on oil imports,” Rizvi said.
He further anticipated that the market would “undergo a corrective phase until the end of December, with a crucial support level at 64,500”.
Rizvi advised investors to “exercise caution at these levels”.
Raza Jafri, Head of Equities at Intermarket Securities Opinion
Meanwhile, Raza Jafri, head of equities at Intermarket Securities, said, “With the KSE-100 having arguably demonstrated an election rally in the last few months, earlier than the usual pattern, some pre-poll anxiety may be creeping in now.”
“Positions built on leverage may also be witnessing margin calls, adding to the pressure,” he added.
In volatile markets where prices might drop dramatically, margin calls are very frequent.
A brokerage will issue a “margin call” if an investor’s account equity drops below the maintenance margin.
This causes the investor to either increase their account balance or liquidate their stock holding.
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