Bears in action as shares at PSX plunge over 2,000 points in intraday trade
The Pakistan Stock Exchange (PSX) witnessed accelerated selling pressure on Tuesday as the benchmark index shed more than 2,000 points in intraday trading.
According to the PSX website, the bourse stayed flat for 10 minutes after the opening bell. At 10:49am, the market began its gradual slide with the KSE-100 index plunging by 1186.19 points to sink to 64,018.48 from the previous close of 65,204.67.
By 2:40pm, the index further dipped by 2,500 points, down 3.96pc from Monday’s close.
A day earlier, the benchmark of major shares lost 925.35 points after investors resorted to profit-taking. Negative contributions came from stocks in exploration and production, fertiliser and banking sectors.
Faran Rizvi, head of equity sales at JS Global, attributed the bearish momentum to “heightened geopolitical tensions” which have caused the global oil prices to surge.
A day earlier, global oil prices rose 3pc as mounting attacks by the Iran-aligned Yemeni Houthi militant group on ships in the Red Sea disrupted maritime trade. Oil major BP said it had temporarily paused all transits through the body of water.
“This poses a significant challenge for countries like Pakistan, which heavily rely on oil imports,” Rizvi said.
He further anticipated that the market would “undergo a corrective phase until the end of December, with a crucial support level at 64,500”. Rizvi advised investors to “exercise caution at these levels”.
Meanwhile, Raza Jafri, head of equities at Intermarket Securities, said: “With the KSE-100 having arguably demonstrated an election rally in the last few months, earlier than the usual pattern, some pre-poll anxiety may be creeping in now.”
“Positions built on leverage may also be witnessing margin calls, adding to the pressure,” he added.
Margin calls are particularly common in volatile markets where prices may fall very quickly. If the equity in an investor’s account falls below the maintenance margin, a brokerage will issue a “margin call”, which forces the investor to either liquidate their position in the stock or add more cash to the account.
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