Selling pressure continued to dominate the Pakistan Stock Exchange (PSX) on Monday, as the benchmark KSE-100 index plummeted by over 700 points. By 11:20 am, the KSE-100 index was recorded at 79,386.80, marking a significant decrease of 731.09 points or 0.91%.
The downturn was evident across various key sectors, including automobile assemblers, cement, chemicals, commercial banks, oil and gas exploration companies, and oil marketing companies (OMCs), all of which traded in the red. Index-heavy stocks such as Oil and Gas Development Company Limited (OGDC), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO), Shell Pakistan (SHEL), Sui Southern Gas Company (SSGC), Habib Bank Limited (HBL), MCB Bank Limited (MCB), and National Bank of Pakistan (NBP) saw negative trading, contributing to the overall decline.
Market experts attributed the bearish trend to rising political tensions within the country. The government’s contemplation of banning the opposition party, Pakistan Tehreek-e-Insaf (PTI), has created a climate of uncertainty among investors, leading to increased selling pressure.
The previous week at the PSX saw a mixed trend. The market began on a bullish note, reaching new levels; however, it failed to sustain this momentum due to heavy selling in the last trading session, which wiped out most of the week’s gains. Despite this, the KSE-100 index managed to gain 173.79 points on a week-on-week basis, closing at 80,117.89.
The negative sentiment in the PSX was also influenced by cautious trading in Asian markets. Investors were preparing for a busy week of corporate earnings that could challenge the high valuations of tech stocks. Additionally, a critical reading of US inflation was anticipated to impact the likelihood of a rate cut by the Federal Reserve in September.
In the US, investors seemed to take in stride the news of President Joe Biden dropping out of the election race and endorsing Vice President Kamala Harris for the Democratic ticket. This development had a mixed impact on global markets, with S&P 500 stock futures edging up by 0.3% and Nasdaq futures increasing by 0.5%. Futures for 10-year US Treasuries rose 3 ticks, while the yields on 10-year bonds dipped by 2 basis points to 4.22%.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased by 0.2%, following a 3% decline the previous week amidst a general risk-off sentiment. Japan’s Nikkei index dropped by 0.6%, while South Korea’s benchmark index decreased by 0.4%. These regional trends further compounded the pressure on the PSX, contributing to the overall bearish outlook.
