Shares at PSX reverse major gains, plunge more than 3,500 points on political uncertainty

Shares at the Pakistan Stock Exchange (PSX) traded in the red after making gains in early trade on Tuesday, plunging more than 3,500 points, which analysts attributed to political turmoil.

Early on, the KSE-100 benchmark had climbed 1,431.29 points, or 1.46 per cent, to stand at 99,511.07 from the previous close of 98,079.78 points at 11:14am.

However, by the end of the trade session, the index plunged 3,505.62 points, or 3.57 per cent, to stand at 94,574.16 points from the previous close.

Mohammed Sohail, chief executive of Topline Securities, said that the market was down due to concerns regarding a protest by the opposition PTI in Islamabad.

“PSX lost Rs481 billion today amid rising political tension due to opposition protest,” he said.

The political scenario in the country remains tense due to PTI’s ‘do or die’ protest in the federal capital, which has been in lockdown for the past few days, with internet disruptions reported. The government has vowed to stop the PTI protest, employing Rangers and other security forces in the city.

Yousuf M. Farooq, director research at Chase Securities, also attributed the market volatility to politics.

Regarding the initial bull run, he had observed that while the market remained “choppy on fears of the political situation turning violent”, a notice from the State Bank of Pakistan (SBP) on removing the minimum deposit rate (MDR) for large depositors caused a rally in the banking sector.

“We believe a move like this will encourage large depositors to opt for directly buying T-Bills, PIBs and Sukuks in case banks do not provide competitive rates,” Farooq recommended.

The PTI protest, which the government is determined to foil with force, was originally scheduled to be staged on November 24, but the convoys took a breather after PTI leaders said they were in “no hurry” to reach the federal capital, as workers and supporters from across the country attempted to defy arrests, baton charges and tear gas to participate in the agitation.