Karachi, November 26, 2024 – The Pakistan Stock Exchange (PSX) witnessed its largest single-day drop on Tuesday, with the benchmark KSE-100 index plummeting by 3,506 points, or 3.57%, due to the escalating political crisis in the country.
The KSE-100 index closed at 94,574 points, down sharply from the previous day’s closing of 98,080 points, which marked a historic high. The last significant decline was recorded on December 19, 2023, when the PSX hit an intra-day low of 2,800 points.
The sharp drop in the index followed reports that the government had deployed the army to manage a violent protest in Islamabad, led by the opposition party Pakistan Tehreek-i-Insaf (PTI). The intervention of military forces to control the situation added to investor anxiety, leading to widespread sell-offs at the PSX.
News footage showing protesters breaching the D Chowk (red zone) in Islamabad further amplified the uncertainty, triggering a panic reaction among market participants. Investors scrambled to liquidate their positions, causing significant losses throughout the trading day.
This downturn comes on the heels of a period of optimism at the PSX, with the KSE-100 index having recently reached an all-time high of 98,080 points. Many had hoped that the index would soon break through the 100,000-point mark. However, the sudden political instability has dampened investor confidence, raising concerns about the sustainability of the market’s upward trend.
“The political unrest has added a layer of uncertainty to a market that was showing strong signs of growth,” said a senior market analyst. “While the economic fundamentals are solid, investor sentiment is heavily influenced by the political climate. The recent crisis has created unease, leading to the sharp drop in PSX.”
Despite the setback, analysts believe the PSX has shown resilience in the past and could bounce back once political tensions subside. Factors such as Pakistan’s steady export performance, strong remittance inflows, and the government’s commitment to market-friendly reforms could help stabilize the market.
“Once the political situation stabilizes, we expect the PSX to regain its momentum. The market fundamentals remain strong, and with positive economic indicators, we remain optimistic about a recovery,” the analyst added.
In the coming days, the performance of the KSE-100 index will be closely watched as an indicator of investor sentiment and the market’s ability to navigate through the ongoing political turmoil.
