The benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) has dropped 3,200 points, or more than 4.6%, over the last two days. At 2:00 pm, the index was essentially unchanged at 62,996 points.
Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, stated that the market was taking profits and that there was significant space for a correction, given that the benchmark index had increased by more than 12,000 points in the previous two and a half months, reaching over 66,000 points as of last week.
Market Talks
Market talks suggested uncertainty related to the forthcoming general elections and the feeling of gloom prevalent transformed the profit-taking drive into panic selling which has resulted in a sharp slump in the market.
Section of Investors
A section of investors had bought shares with borrowed money amounting to over Rs40 billion. The profit selling forced them to offload the holdings to avoid heavy losses. This also contributed to panic selling.
Moreover, Chinese investors have said they would wait for the next elected government to execute investment plans for Pakistan.
Tariq, however, believed this was profit-selling only. The market should settle at around the 63,000-64,000 points level under the current spell. “This is year-end time, and the market may try to consolidate at around current levels to end on a positive note.”
Penny stocks from the power, telecom and technology, banking, and energy sectors were the top volume leaders that were being sold.
Earlier, leading research houses projected the benchmark index hitting growing 30-35% over the next year to around 75,000-81,000 points by December 2024.
They said the forthcoming general elections, likely deceleration in elevated inflation, and a sharp cut in the central bank benchmark policy rate would support the expected rally during 2024.