The Pakistan Stock Exchange (PSX) on Tuesday witnessed a sharp decline, plummeting over 900 points during the trading session after former prime minister Imran Khan and his close aide, ex-foreign minister Shah Mahmood Qureshi, were both sentenced to 10 years in jail in the cypher case.
Market analysts attributed the panic selling to concerns over the law and order situation and the deepening political crisis, especially with the upcoming general election scheduled for February 8. Foreign investors reportedly joined the massive sell-off, fearing the potential impact on the market.
The PSX benchmark KSE-100 Index closed at a one-month low, settling at 61,842 points, marking a day-to-day decrease of 1.48% or 932 points. The decline was widespread, affecting top volume leaders in the energy, telecom, and banking sectors.
Chase Securities’ Director of Research, Yousuf M Farooq, acknowledged the political developments as a contributing factor to the market drop. “The imprisonment of Imran Khan and Qureshi was one of the reasons, not the only one reason for the latest decline at PSX,” he said while talking to The Express Tribune.
The other factors, he said, included sustained foreign sell-offs over the past few days and the State Bank of Pakistan (SBP) maintaining a record-high policy rate of 22% for the next six weeks.
Farooq expressed optimism about the market’s outlook, noting that the economy had stabilised, with rising sales revenue and profits for listed companies.
However, he cautioned that the market’s future trajectory depended on the political situation, urging stability for a positive resumption of the uptrend.
Tuesday marked the fourth consecutive working day of substantial selling at the PSX, resulting in a cumulative drop of around 4.60% or 3,000 points in the past four days.
The market had reached an all-time high at 67,094 points in late December 2023.