Stock Market Plunge: KSE-100 Witnesses a Sharp 4% Decline in a Day

In a tumultuous day at the Pakistan Stock Exchange (PSX), the benchmark KSE-100 Index plummeted by a staggering 2,534 points, experiencing a day-to-day fall of over 4% on Tuesday.

Closing at 59,171, the benchmark KSE-100 witnessed a significant decrease of 4.11%, marking the most substantial day-to-day point decline in the history of KSE-100.

This decline reflects an 11% drop from its recent peak of 66,427, achieved just two weeks ago on December 12, highlighting the heightened volatility witnessed at the PSX in recent weeks.

Tuesday's market downturn saw across-the-board selling, affecting key sectors such as automobile assemblers, cement, chemical, commercial banks, oil and gas marketing companies, oil and gas exploration companies, refineries, and pharmaceuticals, all trading in the red.

CEO of brokerage house Topline Securities, Mohammed Sohail, attributed the swift correction in the KSE-100 Index to a necessary adjustment after a continuous rally. Sohail mentioned the influence of high leveraged positions and year-end dynamics affecting market trends in a post on social media.

Adding to the market woes, the Sindh High Court (SHC) suspended the SRO 1588(I)/2023 of the Federal Board of Revenue (FBR), which had imposed a 40% additional tax on windfall income of banks.

Despite these recent setbacks, Pakistan equities have displayed robust performance, yielding gains of over 50%, outperforming other major asset classes throughout the calendar year 2023.

Notably, in response to political uncertainty, the benchmark KSE-100 Index had lost nearly 1,000 points at the close on Friday, settling at 61,705.09.

While the recent selling pressure is seen as a correction after weeks of impressive growth, the market's resilience has been acknowledged. The SRO suspension and the ongoing global economic landscape have also contributed to the evolving market scenario.

Internationally, Asian stocks traded cautiously on Tuesday as investors absorbed data indicating a US price decline in November for the first time in over 3-1/2 years, affirming the economy's durability.

Globally, Asian stocks experienced tentative trading, with MSCI's broadest index of Asia-Pacific shares outside Japan showing a 0.18% increase. The Nikkei in Japan eased by 0.07%, remaining the best-performing Asian stock market with a 27% gain for the year.

With markets thin on the day after Christmas and several closures, including those in Australia, New Zealand, and Hong Kong, the trading landscape is expected to be subdued.