PSX plunges over 800 points as investors anticipate rate hike
The Pakistan Stock Exchange (PSX) witnessed accelerated selling pressure on Tuesday as the benchmark KSE-100 index lost over 840 points during intraday trading.
At 10am, the market stood at 47,344.53. By 11:25am, selling had intensified and the index dropped to 46,936.03. It recovered slightly to 47,000.85 by 12:15pm. But 45 minutes later, it plummeted to 46,757.67. It continued slide to reach 46,634.48 by 1:40pm, or 844.13 points (1.78pc) below yesterday’s close.
Salman Naqvi, head of research at Aba Ali Habib Securities, stated that the two major reasons for the downward trend of the PSX are the sharp depreciation of the local currency in the open market and the rumours of an emergency monetary policy adjustment to be implemented which will further increase the interest rate.
“The market is continuously dropping, there are many political decisions which can also be cited as a reason, but the biggest reason for it is the dollar as it has caused the current account deficit to increased,” he said.
According to Intermarket Securities’ Head of Equity Raza Jafri, the fall in the KSE was due to the “weak earnings” by technology stocks, adding to an already battered sentiment due to a lack of clarity on politics and the economy.
“An absence of triggers, with the next IMF review not due for several months, is also hurting the investment climate,” Jafri said.
Today’s gloom carried over from yesterday, where the benchmark index remained in the red for most of the session amid rumours about an imminent policy rate hike which triggered profit-selling by some investors.
This strategic choice by investors not only prompted the market to relinquish some of its previously accrued value but also culminated in the index transitioning into unfavourable terrain, noted Topline Securities in its daily market report.
More to follow.