Karachi, February 9, 2024 – The Pakistan stocks experienced a significant setback on Friday as the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) tumbled by 1,200 points.
The abrupt decline, which saw the index drop from 64,144 points to 62,944 points, was attributed to growing uncertainty surrounding the results of the general elections held on February 8, 2024.
Investors, returning after a day break following the elections, were met with a volatile market reacting to the unfolding political landscape. The citizens of Pakistan had cast their votes just a day before, and as the stock market opened, the uncertainty regarding the election outcomes sent shockwaves through the financial markets.
Analysts at Ismail Iqbal Securities reported that the equity market concluded the day on a negative note, with the benchmark index starting the day by plummeting over 2,000 points. The index continued to remain in the red zone throughout the trading session, primarily due to the delayed announcement of election results. However, there was a partial recovery of 1,162 points as some election outcomes were disclosed.
Trading volumes witnessed a notable decrease, with 152 million shares exchanged on this day compared to the previous session’s 195 million shares. The decline in trading activity indicates a cautious approach among investors amid the uncertainty surrounding the election results.
The KSE-100 index ultimately closed at 62,944 points, marking a 1.87 percent decline on a day-on-day (DoD) basis. This substantial drop reflects the market’s sensitivity to political developments and highlights the impact of uncertainty on investor sentiment.
The major sectors contributing to the decline were oil and gas exploration companies, commercial banks, and the fertilizer sector, collectively shedding 638 points from the index. The poor performance of these sectors added to the overall negative sentiment in the market, with investors closely monitoring the political landscape for clarity on the future direction of economic policies.
The election-induced market volatility serves as a reminder of the close relationship between political events and financial markets. Investors are now looking for signs of stability and policy direction, as the market seeks to rebound from the sharp decline witnessed on this post-election trading day.
As the election results unfold and political uncertainties start to settle, market participants are likely to reassess their investment strategies. Policymakers and market regulators may also take steps to address any lingering concerns and instill confidence in the market, paving the way for a more stable and predictable investment environment in the coming weeks. The challenge for Pakistan’s financial authorities will be to strike a balance between political developments and maintaining a resilient and vibrant stock market.
